Pending Home Sales Start Year on Strong Note

Pending home sales rebounded in January following a decline in December, the National Association of Realtors reported yesterday.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose by 5.2% to 108.8 in January. Year-over-year contract signings increased by 5.7%. Only the West region reported a minor drop in month-over-month contract activity, while the other three major regions each saw pending home sales grow. Year-over-year pending home sales activity was up in all four regions and thus up nationally compared to one year ago.

“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,” said NAR Chief Economist Lawrence Yun.

In the Northeast, pending sales rose by 1.3% to 92.9 in January, 1.2% higher than a year ago. In the Midwest, the index increased by 7.3% to 105.3 last month, 6.5% higher than a year ago.

Pending sales in the South rose by 8.7% to 129.4 in January, a 7.1% increase from a year ago. The index in the West declined by 1.1% in January to 92.6 and improved by 5.5% from a year ago.

“We are still lacking in inventory,” Yun said, 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. 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. 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.”