More homes went under contract last month, but higher mortgage rates could undo that progress

<p>Home contract signings rose in February, helped by mortgage rates that hit 3.5-year lows.</p>
<p>The Pending Home Sales Index rose 1.8% from a month earlier, according to National Association of Realtors data released on Tuesday, besting analysts' expectations for a small decline. Compared with a year earlier, pending home sales are down 0.8%.</p>
<p>Contract activity rose month over month in all regions of the country except the Northeast, where homes are the most expensive and supply is the lowest.</p>
<p>"The slight gain in pending contracts appears to be driven by improved affordability conditions. However, those conditions could reverse if higher oil prices lead to an uptick in mortgage rates," NAR chief economist Lawrence Yun said in a statement.</p>
<p>Until recently, homebuyers had been enjoying slightly more buying power compared to a year ago. Wage growth has been outpacing home price appreciation, and mortgage rates were falling, reaching as low as 5.98% at the end of February.</p>
<p>Since the US attacked Iran, however, mortgage rates have moved higher amid concern that higher oil prices could stoke new inflation fears. As of Monday, rates are around 6.36%, according to Mortgage News Daily.</p>
<p>Homes typically go under contract a month or two before they're sold, making pending home sales an early indicator of housing market activity.</p>
<p><a href="https://finance.yahoo.com/author/claire-boston/">Claire Boston</a> is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.</p>