A good economy and low interest rates contributed to a big jump in pending home sales in January, the National Association of Realtors announced Thursday. This builds on a government report released a day earlier that showed new home sales were significantly higher in January.
The Pending Home Sales Index (PHSI) increased 5.2 percent to 108.8 in January – and 5.7 percent over January 2019. An index of 100 is equal to the level of contract activity in 2001.
“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.
Here is a look at pending sales across the country:
- The PHSI rose 1.3 percent to 92.9 in the Northeast January – 1.2 percent higher than January 2019.
- In the Midwest, the PHSI increased 7.3 percent to 105.3 – and 6.5 percent over a year ago.
- The index in the South increased 8.7 percent to 129.4 – also a 7.1 increase over a year ago
- The West was the only region to decline for the month, dropping 1.1 percent in January to 92.6 – which was still 5.5 percent higher than a year ago.
A Look Ahead
The high sales figures and low inventory levels may have an impact on upcoming months’ reports.
“We are still lacking in inventory,” Yun said, noting December’s and January’s combined supply was at the lowest level since 1999. “Inventory availability will be the key to consistent future gains.”
Even with the recent decline in stock prices, Yun expects demand to remain high.
“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.”