Pending Home Sales Edged Down in January
What happened
Pending home sales in the U.S. decreased by 0.8% in January compared to the previous month, according to a new report from the National Association of REALTORS. The data, which tracks the level of home sales under contract, also showed a 0.4% decline year-over-year, indicating a slight cooling in the housing market.
Why it matters
- The slide in pending home sales was contrary to expert predictions, as economists had forecasted a 2.5% increase for January after a revised 7.4% plunge in December. - Performance varied significantly by region; contract signings surged in the Midwest by 5.0% and the West by 4.3%, while the Northeast and South saw declines of 5.7% and 4.5%, respectively. - According to NAR Chief Economist Lawrence Yun, lower mortgage rates nearing 6% have made an additional 5.5 million households eligible for a mortgage compared to a year ago, though this has not yet translated into increased buying activity. - Yun also cautioned that without an increase in the housing supply, the entry of these newly qualified buyers into the market could lead to higher home prices, underscoring a critical need for more home construction. - This data on contract signings, which is a leading indicator for the housing market, precedes a separate report showing that sales of existing homes also fell sharply by 8.4% in January. - Despite the national downturn, several large metropolitan areas experienced significant year-over-year increases in pending sales, including Phoenix (+11.8%), Boston (+10.7%), and Charlotte (+10.7%). - Analysts suggest that buyers are gravitating towards markets with more affordable homes or greater inventory, as many Southern and Western markets had housing stock above pre-pandemic levels.
Key numbers
- decreased by 0.8% in January compared to the previous month, according to a new report from the National Association of REALTORS.
- The data, which tracks the level of home sales under contract, also showed a 0.4% decline year-over-year, indicating a slight cooling in the housing market.
- - The slide in pending home sales was contrary to expert predictions, as economists had forecasted a 2.5% increase for January after a revised 7.4% plunge in December.
- Performance varied significantly by region; contract signings surged in the Midwest by 5.0% and the West by 4.3%, while the Northeast and South saw declines of 5.7% and 4.5%, respectively.
What happens next
- Yun also cautioned that without an increase in the housing supply, the entry of these newly qualified buyers into the market could lead to higher home prices, underscoring a critical need for more home construction.
Quick answers
What happened in Pending Home Sales Edged Down in January?
Pending home sales in the U.S. decreased by 0.8% in January compared to the previous month, according to a new report from the National Association of REALTORS. The data, which tracks the level of home sales under contract, also showed a 0.4% decline year-over-year, indicating a slight cooling in the housing market.
Why does Pending Home Sales Edged Down in January matter?
The slide in pending home sales was contrary to expert predictions, as economists had forecasted a 2.5% increase for January after a revised 7.4% plunge in December. Performance varied significantly by region; contract signings surged in the Midwest by 5.0% and the West by 4.3%, while the Northeast and South saw declines of 5.7% and 4.5%, respectively. According to NAR Chief Economist Lawrence Yun, lower mortgage rates nearing 6% have made an additional 5.5 million households eligible for a mortgage compared to a year ago, though this has not yet translated into increased buying activity. Yun also cautioned that without an increase in the housing supply, the entry of these newly qualified buyers into the market could lead to higher home prices, underscoring a critical need for more home construction. This data on contract signings, which is a leading indicator for the housing market, precedes a separate report showing that sales of existing homes also fell sharply by 8.4% in January. Despite the national downturn, several large metropolitan areas experienced significant year-over-year increases in pending sales, including Phoenix (+11.8%), Boston (+10.7%), and Charlotte (+10.7%). Analysts suggest that buyers are gravitating towards markets with more affordable homes or greater inventory, as many Southern and Western markets had housing stock above pre-pandemic levels.
