NAR: Pending Home Sales Rise 5.2% in January
WASHINGTON – Pending home sales rebounded in January following a decline in December, according to the National Association of Realtors® (NAR). Only the West region reported a minor drop in month-over-month contract activity, as the other three major regions saw pending home sales grow.
Year-over-year pending home sales activity was up in all four regions and up nationally compared to one year ago.
The Pending Home Sales Index (PHSI) – a forward-looking indicator based on contract signings – grew 5.2% to 108.8 in January. Year-over-year contract signings increased 5.7%. An index of 100 is equal to the level of contract activity in 2001.
“This month’s solid activity – the second-highest monthly figure in over two years – is due to the good economic backdrop and exceptionally low mortgage rates,” says Lawrence Yun, NAR’s chief economist.
“We are still lacking in inventory,” he adds, noting December’s and January’s combined supply was at the lowest level since 1999. “Inventory availability will be the key to consistent future gains.”
Pointing to data from active listings at realtor.com, Yun says the year-over-year increases show a strong desire for homeownership. Markets drawing some of the most significant buyer attention include Fort Wayne, Ind.; San Francisco, Calif.; Sacramento, Calif.; Lafayette, Ind.; and San Jose, Calif.
“With housing starts hovering at 1.6 million in December and January, along with the favorable mortgage rates, among other factors, 2020 has so far presented a very positive sales climate,” Yun says. “Moreover, the latest stock market correction could provide exceptional, even lower mortgage rates for a few weeks, and that would help bring about a noticeable upturn in the coming months.”
Regional breakdown: The Northeast PHSI rose 1.3% to 92.9 in January, 1.2% higher than a year ago. In the Midwest, the index increased 7.3% to 105.3 last month, 6.5% higher than in January 2019.
Pending home sales in the South grew 8.7% to an index of 129.4 in January, a 7.1% increase from January 2019. The index in the West declined 1.1% in January 2020 to 92.6, still a jump of 5.5% from a year ago.
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