Pending Sales Hit Record Low

Pending sales sank to their lowest level on record due to high rates and severe weather.

NAR’s Pending Home Sales Index decreased 4.6% from December to a reading of 70.6. An index of 100 equals the level of contract activity in 2001 when NAR began tracking this data.

The decrease is much larger than expected by economists surveyed by Bloomberg, who predicted a 0.9% dip.

Year-over-year, sales were down 5.2%.

“It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months,” said NAR Chief Economist Lawrence Yun. “However, it’s evident that elevated home prices and higher mortgage rates strained affordability.”

All four regions saw annual declines, with the biggest drop in the South. Several Southern states received record snowfall in January, forcing home shopping to the back burner for some buyers.

Month-over-month, contract signings fell in all regions but the Northeast, which has some of the hottest U.S. markets this year.

New and existing home sales were also down last month, suggesting the overall market hit a wall.

At the same time, home prices continue inching up, and rates remain above 6.5%.