The National Association of Realtors (NAR) announced on Wednesday its seasonally adjusted pending home sales index (PHSI) tumbled 10.6 percent m-o-m to 110.3 in February, after a revised 2.4 percent m-o-m drop in January (originally a 2.8 percent m-o-m decrease).

Economists had expected pending home sales to decline 3.5 percent m-o-m in February.

On y-o-y basis, the index fell 0.5 percent after a revised 13.5 percent surge in January (originally a 13.0 percent m-o-m climb). This marked the first decrease since May 2020.

According to the report, all four regional indices recorded month-over-month decreases in February but were mixed year-over-year. The Northeast PHSI plunged 9.2 percent m-o-m to 92.3 in February, a 3.9 percent drop from a year ago. The PHSI for the Midwest declined 9.5 percent to 102.4 last month, down 6.1 percent from February 2020. Pending home sales in the South shrank 13.0 percent to an index of 133.2 in February, up 2.9 percent from February 2020. The index in the West went down 7.4 percent in February to 96.9, up 1.9 percent from a year prior.

"The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift but contracts are not clicking due to record-low inventory," said Lawrence Yun, NAR's chief economist. "Only the upper-end market is experiencing more activity because of reasonable supply. Demand, interestingly, does not yet appear to be impacted by recent modest rises in mortgage rates."