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.
- 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.
