Pending home sales rise in January

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Pending home sales rise in January

By HBSDealer Staff - 02/27/2020
Pending home sales rebounded in January following a decline in December, the National Association of Realtors (NAR) reported.

The Pending Home Sales Index (PHSI) increased 5.2% to 108.8 in January as year-over-year contract signings are up 5.7%. The index is a forward-looking indicator based on contract signings and an index of 100 is equal to the level of contract activity in 2001, the NAR said.

“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 Lawrence Yun, NAR’s chief economist.

But Yun notes that the market continues to lack inventory with the combined supply in December and January being the lowest level since 1999. “Inventory availability will be the key to consistent future gains.”

By region, 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.

Year-over-year increases show a strong desire for homeownership, according to the NAR. 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 said. “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.”

In another sign of the strength of the housing market, new single-family home sales for January jumped 7.9% to a seasonally adjusted annual rate of 764,000 from the revised rate of 708,000. This pace is the highest level since July 2017 and 18.6% above the January 2019 rate of 644,000.

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