A brief window of sub-6 percent mortgage rates lifted pending home sales 1.8 percent month over month in February, according to the National Association of Realtors on Tuesday. However, the measure — which tracks contract signings for existing homes — was still down 0.8 percent annually, reflecting persistent market headwinds.
Lawrence Yun
“The slight gain in pending contracts appears to be driven by improved affordability conditions,” NAR Chief Economist Lawrence Yun said in the report.
The Midwest outperformed its counterparts, with pending sales jumping 4.6 percent month-over-month and remaining relatively flat year over year. The South and West both posted modest monthly and annual gains, while weak supply and higher home prices restrained contract signings in the Northeast compared to January (-3.6 percent) and February 2025 (-12.1 percent).
Yun said the Iran conflict has the potential to wreck March pending home sales, if higher crude oil prices lead to rising mortgage rates. A recent Inman article explained the connection, with several economists saying that higher crude oil prices lead to higher fuel costs, which are passed through the market as inflation on goods.
If inflation starts moving in the wrong direction, Windermere Principal Economist Jeff Tucker said the Federal Reserve may choose to hold off on planned rate cuts or actually “jack up” interest rates. “It’s not everyone’s favorite,” he said of the option to raise rates. “But it’s the cure for a demand shock.”
Dr. Lisa Sturtevant
Bright MLS Chief Economist Lisa Sturtevant said the chances of a weak spring homebuying season are increasing, with economic and political volatility giving consumers pause.
“When 2026 started, there was a lot of optimism for a strong spring housing market,” she said in an emailed statement. “At this point, the start of the spring homebuying season is delayed, with sellers holding off on putting their homes on the market and buyers questioning whether it is the right time for them to buy.”
“The conflict with Iran introduced a whole new set of concerns to the economy and the housing market as oil prices surged and a potential resolution of the conflict has become more uncertain,” she added. “If the conflict is prolonged, the spring housing market could not just be delayed but be much less robust than predicted earlier this year.”
Hannah Jones | Credit: Realtor.com
Despite the volatility, Realtor.com Sr. Economic Research Analyst Hannah Jones said the market has “structurally shifted into more buyer-friendly territory” and could lead to a solid spring in “well-supplied” markets. Yun echoed Jones in his final assessment of February’s pending home sales, saying there’s still “sizable pent-up demand that could be released into the market.”
“For first-time homebuyers, purchasing a home is not a snap decision,” he said.“It takes time to build credit, save for a down payment, and fulfill existing rental lease agreements. Although job gains have been sluggish in recent months, there are still 6 million more jobs in the country than in the pre-COVID period.”
