“As Good As It Gets’? – Pending Home Sales Surge In February Ahead Of National Lockdown

Once again, pending home sales will be the tie-breaker for February housing data (existing sales soared, new sales slipped) and expectations were that it would be weaker (after a huge surge in January) but instead it surged 2.4% MoM (vs 1.8% drop expected).

January’s upwardly revised (from 5.2% to +5.3%) spike was the highest since Oct 2010 and the YoY rise in sales of 11.5% is the highest since April 2015

Source: Bloomberg

This is the highest level (SAAR) of pending home sales since April 2016…

Source: Bloomberg

Pending sales last month increased in all four regions, led by a 4.6% gain in the West and a 4.5% advance in the Midwest. The index for the South, the largest region, was the highest since March 2006.

“Housing, just like most other industries, suffered from the coronavirus crisis, but once this predicament is behind us and the habit of social distancing is respected, I’m encouraged there will be continued home transactions though with more virtual tours, electronic signatures, and external home appraisals,” Lawrence Yun, NAR’s chief economist, said in a statement.

Yun noted that the data do not capture the fallout from measures taken to control the outbreak.

So the question is – have homebuilder stocks over-reacted or are we just not seeing the impact of COVID-19 lockdowns in the data yet?

Source: Bloomberg

We suspect we know which.