NAR’s Pending Home Sales Index – a forward-looking indicator based on contract signings – declined 2.5 percent to 106.0 in January from an upwardly revised 108.7 in December. However, year-to-year it’s 1.4 percent above January 2015 (104.5). Although the index has increased year-over-year for 17 consecutive months, last month’s annual gain was the second smallest (September 2014, 1.2 percent) over that time.
A myriad of reasons likely contributed to January contract signings subsiding in most of the country, says NAR Chief Economist Lawrence Yun.
“While January’s blizzard possibly caused some of the pullback in the Northeast, the recent acceleration in home prices and minimal inventory throughout the country appears to be the primary obstacle holding back would-be buyers,” Yun says. “Additionally, some buyers could be waiting for a hike in listings come springtime.”
Existing-home sales increased last month and were considerably higher than the start of 2015, but price growth quickened to 8.2 percent – the largest annual gain since April 2015 (8.5 percent).
While Yun hopes that appreciating home values will start to entice more homeowners to sell, Yun says supply and affordability conditions won’t meaningfully improve until homebuilders start ramping up production – especially of homes at lower price points.
NAR forecasts that existing-home sales this year will be around 5.38 million, an increase of 2.5 percent from 2015. The national median existing-home price for all of this year is expected to increase between 4 and 5 percent. In 2015, existing-home sales increased 6.3 percent and prices rose 6.8 percent.
Pending sales in the Northeast declined 3.2 percent to 94.5 in January, but it’s still 10.9 percent above a year ago. In the Midwest, the index fell 4.9 percent to 101.1 in January, but it’s still 1.4 percent above January 2015.
Pending home sales in the South inched up 0.3 percent to an index of 121.1 in January but remain 1.3 percent lower than last January. The index in the West decreased 4.5 percent in January to 96.5, but it’s 0.4 percent above a year ago.
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