Pending home sales jumped in January, a strong showing and the second increase since May 2022, according to the National Association of Realtors.
NAR’s Pending Home Sales Index improved 8.1% between December and January. Year-over-year it dropped by 24.1%, an improvement over December’s 33.8% decline.
All four regions saw pending sales fall YOY, but signings increased month-over-month in each.
“Buyers responded to better affordability from falling mortgage rates in December and January,” said NAR Chief Economist Lawrence Yun.
Yun expects home sales to stall in 2023 despite NAR’s data.
“Home sales activity looks to be bottoming out in the first quarter of this year, before incremental improvements will occur. But an annual gain in home sales will not occur until 2024. Meanwhile, home prices will be steady in most parts of the country with a minor change in the national median home price,” Yun said.
Rates dipped throughout January, but have risen again in recent weeks. Fannie Mae said January started off surprisingly strong, but that boost isn’t expected to last.
“While some optimism appears to have crept into the housing sector, it represents an increase from very low levels of activity and is at risk of declining again if rates reverse,” Doug Duncan, senior vice president and chief economist, said.
Rates rose to 6.50% last week, a third consecutive increase, as sticky inflation keeps the cost of borrowing high. Nerdwallet predicts that rates will inch higher in March.
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— The Mortgage Note (@TheMortgageNote) February 21, 2023
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