Pending Home Sales Dip in January
Pending home sales decreased by 0.8% in January compared to the previous month, according to a new report from the National Association of REALTORS®. On a year-over-year basis, sales under contract were down 0.4%, signaling a slight contraction in market activity at the start of the year.
- The January Pending Home Sales Index (PHSI) registered at 70.9, a figure that was contrary to economists' expectations of a 2.5% increase. This represents the lowest level for the index in its recorded history. - Regional performance varied significantly across the country. Sales surged by 5.0% in the Midwest and 4.3% in the West on a month-over-month basis. Conversely, the Northeast saw a 5.7% decrease, and the South experienced a 4.5% drop. - NAR Chief Economist Lawrence Yun noted that while improving affordability from mortgage rates nearing 6% has theoretically qualified an additional 5.5 million households for a mortgage, this has not yet translated into increased buying activity. - Several factors are believed to have influenced the January numbers, including ongoing economic uncertainty, low housing inventory, and severe winter weather that occurred during the month. - Housing inventory remains a significant constraint on the market. The available supply of homes for sale was measured at 1.22 million in January, which equates to a 3.7-month supply, the lowest since February 2025. - The Pending Home Sales Index is a forward-looking indicator, with contract signings typically preceding closed sales by one to two months, suggesting a potential for continued softness in existing-home sales in the near term. - Despite the national decrease, several large metropolitan areas posted notable year-over-year gains in pending sales, including Phoenix (+11.8%), Boston (+10.7%), and Charlotte (+10.7%).
