Mortgage rates drop to boost demand, unexpected rise in existing home sales in the United States in February

Signs of a recovery in the U.S. real estate market are emerging. Data released by the National Association of Realtors (NAR) on Tuesday showed that existing home sales unexpectedly rose in February, marking the first increase in three months, primarily due to a drop in mortgage rates and a slowdown in home price growth, attracting some buyers to the market. The data showed that the pending home sales index, which measures the signing of contracts for existing homes, rose by 1.8% in February compared to the previous month. Economists surveyed earlier had expected this index to decline by 0.6%. Pending sales refer to the number of homes that have signed purchase contracts but have not yet completed transactions, so they are usually viewed as an important leading indicator of future home sales because homes typically finalize transactions one to two months after signing contracts. The increase in signing activity in February coincided with mortgage rates in the U.S. falling to their lowest level since 2022, sending a positive signal to the real estate market before the peak selling season in spring. Spring is typically the busiest time for listing and trading homes in the U.S. Lower borrowing costs and a slowdown in home price growth have recently improved affordability for homebuyers to some extent. Lawrence Yun, chief economist at NAR, said the slight increase in pending home contracts mainly reflects the improvement in affordability for homebuyers. However, he also warned that if rising oil prices push mortgage rates up again, this improvement trend could reverse. In fact, in the first week of March, as the conflict between the U.S. and Iran sparked concerns about inflation, U.S. mortgage rates saw their largest increase since September last year, which could pose new uncertainty for the recovery of the real estate market. By region, most areas in the four major regions of the U.S. saw growth. The southern region saw a 2.7% increase in pending sales; the Midwest region rose by 4.6%; and the western region also recorded a slight increase. In contrast, the Northeast region saw a decline in signing activity. Housing affordability has become an important economic and political issue in the U.S. As the midterm elections in November approach, President Trump has recently taken several measures to boost homeownership, including signing two executive orders last week aimed at improving mortgage access and easing some environmental regulations to accelerate real estate development projects.