The U.S. housing market is finally showing some signs of life. After a dismal January, pending home sales rebounded in February, with the National Association of Realtors’ Pending Home Sales Index rising 2.0% to 72.0. This modest increase is a welcome change, but it’s still a long way from normal levels.
The South led the way with a robust 6.2% jump, while other regions saw more modest gains or even declines. Despite this positive movement, pending transactions remain 3.6% below last year’s levels. As NAR Chief Economist Lawrence Yun noted, “Contract signings remain well below normal historical levels.”
What’s Driving the February Rebound?
So, what’s driving this rebound? Lower mortgage rates and more homes on the market are helping to bring buyers back. Several factors likely contributed to February’s modest improvement:
- Declining mortgage rates – The average 30-year fixed mortgage rate fell to 6.76% by the end of February, the lowest level in two months. This represented a meaningful drop from January’s peak above 7%.
- Increasing inventory – The supply of available homes has been gradually improving, with existing home inventory growing to 1.24 million units, representing a 5.1% increase from January and a substantial 17% jump year-over-year.
- Seasonal factors – The approach of spring typically brings more buyers into the market, and the favorable seasonal adjustment may have played a role in February’s numbers.
- Pent-up demand – New inventory and available housing have released pent-up demand.
However, economic uncertainty and affordability challenges continue to hold the market back. Many homeowners are also hesitant to sell because they’ve locked in lower mortgage rates on their current homes.
Miami and South Florida Real Estate Market Trends
In Miami and South Florida, the market is seeing its own unique trends. Neighborhoods like Coconut Grove, Coral Gables, Brickell, Downtown Miami, and Miami Beach are experiencing varying degrees of activity. For instance, Coral Gables is seeing steady growth, while Miami Beach is thriving with luxury properties.
Miami-Dade County saw luxury market growth, with single-family homes priced at $1 million and above saw a 3.6% year-over-year increase in sales volume. The value of condoes appreciated as median condo prices rose 8.3% year-over-year, reaching $455,000. Despite these gains, in February 2025, total sales across Miami-Dade decreased by 15.5% year-over-year.
Persistent Headwinds Limiting Further Growth
Consumer and business confidence has waned amid ongoing policy-related uncertainties. In February, consumer confidence fell at the fastest pace in more than three years, reflecting growing concerns about the potential impact of tariffs, federal job cuts, and changes to immigration policies.
In addition to these new uncertainties, the affordability of the real estate market in many parts of the country is still at challenging levels for many potential buyers. Further, Many homeowners are reluctant to sell because they’ve locked in substantially lower mortgage rates on their existing homes.
Conclusion on the State of the Real Estate Market
February’s pending home sales data offers a modest positive sign for the housing market, but we’re still a long way from normal activity levels. With the index at 72.0, pending sales remain well below the baseline of 100.
The spring buying season will be a crucial test of whether February’s improvement represents the beginning of a sustainable recovery or merely a temporary reprieve in an otherwise challenging market. Lower mortgage rates, moderating home prices, and rising incomes – remain keys to unlocking more robust housing market activity.For now, cautious optimism seems the appropriate stance as we monitor whether the February uptick develops into a more substantial trend in the months ahead.
