US Pending Home Sales Beat Expectations in February, but Middle East War Threatens to Reverse Gains

Home contract signings across the United States rose unexpectedly in February, offering a flicker of optimism for a housing market that has struggled under the weight of elevated borrowing costs and chronic undersupply. But the gains may prove short-lived as the war in the Middle East pushes oil prices higher and threatens to reverse the mortgage rate relief that made the rebound possible.

The National Association of Realtors reported on Tuesday that the Pending Home Sales Index climbed 1.8 percent from the prior month to a reading of 72.1 . Economists surveyed by Reuters had expected a decline of 0.5 percent, making the February print a clear upside surprise US pending home sales unexpectedly rebound in February on lower mortgage ratesfinance.yahoo.com·SecondaryWASHINGTON, March 17 (Reuters) - Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to ‌be limited by the war in the Middle East that is raising oil ‌prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of ​Realtors said on Tuesday.. Year over year, however, contract activity remained down 0.8 percent, underscoring the persistent drag on housing demand More homes went under contract last month, but higher mortgage rates could undo that progressfinance.yahoo.com·SecondaryHome contract signings rose in February, helped by mortgage rates that hit 3.5-year lows. The Pending Home Sales Index rose 1.8% from a month earlier, according to National Association of Realtors data released on Tuesday, besting analysts' expectations for a small decline. Compared with a year earlier, pending home sales are down 0.8%. Contract activity rose month over month in all regions of the country except the Northeast, where homes are the most expensive and supply is the lowest..

Regional Breakdown: Most of the Country Gained Ground

The improvement was broadly distributed across three of the four major census regions. Contract signings rose in the West, the densely populated South, and the Midwest US pending home sales unexpectedly rebound in February on lower mortgage ratesfinance.yahoo.com·SecondaryWASHINGTON, March 17 (Reuters) - Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to ‌be limited by the war in the Middle East that is raising oil ‌prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of ​Realtors said on Tuesday.. The Northeast was the sole exception, with pending sales falling month over month in a region where home prices are the highest and inventory the most constrained More homes went under contract last month, but higher mortgage rates could undo that progressfinance.yahoo.com·SecondaryHome contract signings rose in February, helped by mortgage rates that hit 3.5-year lows. The Pending Home Sales Index rose 1.8% from a month earlier, according to National Association of Realtors data released on Tuesday, besting analysts' expectations for a small decline. Compared with a year earlier, pending home sales are down 0.8%. Contract activity rose month over month in all regions of the country except the Northeast, where homes are the most expensive and supply is the lowest..

The regional pattern reflects a familiar divide. In markets where land is available and construction has historically kept pace with demand, lower rates translated into more buyer activity. In the expensive coastal corridors of the Northeast, even a dip in rates was not enough to overcome the affordability wall.

Mortgage Rates: A Brief Window of Relief

The February data captured a moment when borrowing costs were moving in buyers' favor. Mortgage rates had been drifting lower since the start of the year, in part because President Donald Trump directed the government-backed mortgage firms Fannie Mae and Freddie Mac to expand their purchases of mortgage-backed securities US pending home sales unexpectedly rebound in February on lower mortgage ratesfinance.yahoo.com·SecondaryWASHINGTON, March 17 (Reuters) - Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to ‌be limited by the war in the Middle East that is raising oil ‌prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of ​Realtors said on Tuesday.. That policy action, combined with moderating Treasury yields, pushed the average rate on a 30-year fixed mortgage down to 5.98 percent by the end of February — the lowest level in roughly three and a half years More homes went under contract last month, but higher mortgage rates could undo that progressfinance.yahoo.com·SecondaryHome contract signings rose in February, helped by mortgage rates that hit 3.5-year lows. The Pending Home Sales Index rose 1.8% from a month earlier, according to National Association of Realtors data released on Tuesday, besting analysts' expectations for a small decline. Compared with a year earlier, pending home sales are down 0.8%. Contract activity rose month over month in all regions of the country except the Northeast, where homes are the most expensive and supply is the lowest..

That window has since closed. Following the outbreak of hostilities between the United States, Israel, and Iran, oil prices surged and Treasury yields rose, dragging mortgage rates back up to approximately 6.36 percent as of earlier this week, according to Mortgage News Daily More homes went under contract last month, but higher mortgage rates could undo that progressfinance.yahoo.com·SecondaryHome contract signings rose in February, helped by mortgage rates that hit 3.5-year lows. The Pending Home Sales Index rose 1.8% from a month earlier, according to National Association of Realtors data released on Tuesday, besting analysts' expectations for a small decline. Compared with a year earlier, pending home sales are down 0.8%. Contract activity rose month over month in all regions of the country except the Northeast, where homes are the most expensive and supply is the lowest.. Because mortgage rates closely track the yield on the benchmark 10-year Treasury note, any sustained increase in energy-driven inflation expectations feeds directly into higher borrowing costs for homebuyers US pending home sales unexpectedly rebound in February on lower mortgage ratesfinance.yahoo.com·SecondaryWASHINGTON, March 17 (Reuters) - Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to ‌be limited by the war in the Middle East that is raising oil ‌prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of ​Realtors said on Tuesday..

NAR chief economist Lawrence Yun acknowledged that improved affordability conditions had driven the modest uptick in contract activity, but cautioned that the trend could reverse if elevated oil prices continued to put upward pressure on mortgage rates More homes went under contract last month, but higher mortgage rates could undo that progressfinance.yahoo.com·SecondaryHome contract signings rose in February, helped by mortgage rates that hit 3.5-year lows. The Pending Home Sales Index rose 1.8% from a month earlier, according to National Association of Realtors data released on Tuesday, besting analysts' expectations for a small decline. Compared with a year earlier, pending home sales are down 0.8%. Contract activity rose month over month in all regions of the country except the Northeast, where homes are the most expensive and supply is the lowest..

The Supply Problem Has Not Gone Away

Even before the rate reversal, the housing market was operating under severe structural constraints. There remains a critical shortage of starter homes, the entry-level properties that first-time buyers depend on US pending home sales unexpectedly rebound in February on lower mortgage ratesfinance.yahoo.com·SecondaryWASHINGTON, March 17 (Reuters) - Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to ‌be limited by the war in the Middle East that is raising oil ‌prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of ​Realtors said on Tuesday.. That shortage has kept prices elevated despite cooling demand, creating a paradox in which affordability is improving on the income side but not on the price side.

Single-family housing starts fell to approximately 943,000 units in 2025, down from 1.016 million units the prior year, according to government data . Builders have been reluctant to ramp up production for several reasons. Construction materials have become more expensive in the wake of the Trump administration's import tariffs, which apply to key inputs like lumber and steel US pending home sales unexpectedly rebound in February on lower mortgage ratesfinance.yahoo.com·SecondaryWASHINGTON, March 17 (Reuters) - Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to ‌be limited by the war in the Middle East that is raising oil ‌prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of ​Realtors said on Tuesday.. At the same time, labor shortages — exacerbated by the administration's immigration enforcement policies — have increased costs and slowed project timelines US pending home sales unexpectedly rebound in February on lower mortgage ratesfinance.yahoo.com·SecondaryWASHINGTON, March 17 (Reuters) - Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to ‌be limited by the war in the Middle East that is raising oil ‌prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of ​Realtors said on Tuesday..

A shortage of buildable lots adds another layer of difficulty. Meanwhile, sluggish new home sales have left an oversupply of unsold newly built properties sitting on the market, creating a glut that discourages builders from breaking ground on additional projects US pending home sales unexpectedly rebound in February on lower mortgage ratesfinance.yahoo.com·SecondaryWASHINGTON, March 17 (Reuters) - Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to ‌be limited by the war in the Middle East that is raising oil ‌prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of ​Realtors said on Tuesday..

Affordability Becomes a Political Flashpoint

Housing costs have become an increasingly potent political issue as the country heads toward the November midterm elections. Trump signed an executive order last week aimed at improving access to mortgage credit and removing regulatory barriers to the construction of affordable homes US pending home sales unexpectedly rebound in February on lower mortgage ratesfinance.yahoo.com·SecondaryWASHINGTON, March 17 (Reuters) - Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to ‌be limited by the war in the Middle East that is raising oil ‌prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of ​Realtors said on Tuesday.. The move was widely seen as an attempt to address voter frustration over the cost of homeownership, which has risen sharply relative to wages over the past several years.

Economists and industry groups have broadly welcomed the push for deregulation but argue that the affordability crisis will not be resolved without a meaningful increase in housing supply. The challenge is that the same administration policies designed to boost demand — such as expanded government-backed lending — risk pushing prices even higher if supply does not keep pace.

On the other side of the political aisle, critics contend that the administration's tariff regime and immigration crackdowns are themselves contributing to the supply shortage by raising construction costs and depleting the building trades workforce. The tension between demand-side stimulus and supply-side constraints has become one of the defining policy contradictions of the current housing cycle.

Builder Sentiment Holds Steady, but Caution Prevails

A survey released earlier this week showed builder confidence was little changed in March, with respondents continuing to cite elevated construction costs, limited availability of buildable lots, and labor shortages as their primary concerns US pending home sales unexpectedly rebound in February on lower mortgage ratesfinance.yahoo.com·SecondaryWASHINGTON, March 17 (Reuters) - Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to ‌be limited by the war in the Middle East that is raising oil ‌prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of ​Realtors said on Tuesday.. The flat reading suggests that the February rebound in pending sales has not yet translated into renewed optimism among developers.

Builders remain caught between steady underlying demand — particularly from millennials entering their peak homebuying years — and a cost structure that makes new construction increasingly difficult to pencil out at price points accessible to median-income households.

What Comes Next: Spring Season Faces Crosswinds

Pending home sales are considered a leading indicator of future existing-home sales, since contracts typically close one to two months after signing More homes went under contract last month, but higher mortgage rates could undo that progressfinance.yahoo.com·SecondaryHome contract signings rose in February, helped by mortgage rates that hit 3.5-year lows. The Pending Home Sales Index rose 1.8% from a month earlier, according to National Association of Realtors data released on Tuesday, besting analysts' expectations for a small decline. Compared with a year earlier, pending home sales are down 0.8%. Contract activity rose month over month in all regions of the country except the Northeast, where homes are the most expensive and supply is the lowest.. The February data suggests that the spring selling season could have gotten off to a stronger start were it not for the sudden reversal in mortgage rates.

The outlook now hinges on several interrelated variables. If the conflict in the Middle East escalates further, oil prices could continue to climb, keeping rates elevated and dampening buyer enthusiasm. Conversely, any de-escalation or diplomatic breakthrough could ease inflationary pressures and allow rates to drift lower again.

For prospective buyers, the calculus has become more complicated. Those who locked in rates near the February lows may find themselves with significantly better deals than those entering the market in the weeks ahead. For sellers, the brief uptick in activity is a reminder that demand has not disappeared — it has simply been priced out by a combination of high rates and limited inventory.

The housing market in 2026 remains a story of competing forces: improving wages, a still-tight labor market, and government efforts to expand credit on one side; geopolitical instability, inflation fears, tariff-driven construction costs, and a chronic shortage of buildable land on the other. The February pending sales data was a reminder that when conditions align even briefly in buyers' favor, activity responds. Whether those conditions can be sustained is the question that will define the months ahead.