A rise in buyer demand pushed pending home sales upward in January to the highest level since August 2013, according to the National Association of REALTORS®’ Pending Home Sales Index, a forward-looking indicator based on contract signings. All regions across the country posted gains in January, except for the Midwest.
The Latest Housing Indicators
The Pending Home Sales Index rose 1.7 percent in January to a 104.2 reading – 8.4 percent above levels from a year ago.
"Contract activity is convincingly up compared to a year ago despite comparable inventory levels," says Lawrence Yun, NAR’s chief economist. "The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs, and slow price growth."
Yun also notes improving conditions for traditional buyers looking to enter the market. All-cash sales and sales to investors are falling, which has created less competition for the traditional buyer who has already been faced with a tight supply of homes for-sale.
"All indications point to modest sales gains as we head into the spring buying season," says Yun. "However, the pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices. Appreciation anywhere near double-digits isn’t healthy or sustainable in the current economic environment."
A Regional Look
Here’s a closer look at the performance of pending home sales across the country in January, according to NAR’s index:
- Northeast: the Pending Home Sales Index moved up slightly by 0.1 percent in January to an 84.9 reading. It is 6.9 percent above year ago levels.
- Midwest: the index fell 0.7 percent to 99.3 in January; it is 4.2 percent above January 2014.
- South: the index rose by the largest amount in the South, up 3.2 percent in January to a reading of 121.9 – the highest since April 2010; the index is 9.7 percent above where it was a year ago.
- West: the index climbed 2.2 percent in January to 96.4 and is 11.4 percent above a year ago.