The number of Americans who signed contracts to buy U.S. homes dipped in February from nearly a two-year high, a mixed signal ahead of the spring home-buying season.
The National Association of Realtors said today that its index of sales agreements declined 0.5 percent last month to a reading of 96.5. January's reading of 97 was the highest since April 2010, the last month buyers could qualify for a federal home-buying tax credit.
A reading of 100 or higher is considered healthy. April 2010 was also the last time it was that high.
More signings in recent months are among the signs of a slight pick-up in the housing market. Still, analysts said the decline in February report was disappointing after the three best months of hiring in two years.
"So far, stronger employment growth has not prompted significantly sturdier willingness to sign purchase contracts, despite — or perhaps because of — some erosion in house prices over the last few months," said Pierre Ellis, an economist at Decision Economics.
Contract signings typically indicate where the housing market is headed. There's a one- to two-month lag between a signed contract and a completed deal. A sale isn't final until a mortgage is closed.
January and February made up the best winter for completed sales in five years, when the housing crisis began. And builders are more confident about the market and have is year. In February, they requested the most permits to build single-family homes and apartments since October 2008.
Homes are the most affordable they've been in decades. And mortgage rates remain a bargain.
The job market is also getting stronger. The economy has added an average of 245,000 jobs per month from December through February. The unemployment rate has fallen to 8.3 percent, the lowest in three years.
Another reason for the uptick in sales: Fannie Mae and Freddie Mac have both announced they plan to raise the fees on mortgage applications in April. The government-controlled mortgage buyers own or guarantee about half of all U.S. mortgages and 90 percent of new loans.
Analysts caution that the damage from the housing bust is deep and the industry is years away from fully recovering
Potential buyers are holding off for a number of reasons. Despite the recent job gains, unemployment remains high. Many buyers can't qualify for loans. Lenders are requiring higher credit scores and larger down payments.
And some who can qualify are hesitant to buy because they worry home prices will keep falling.