Pending home sales down 4.9% in January
January saw a tale of two trajectories, depending on if you were looking backward or forward. Existing-home sales, that is, transactions that were actually completed, were up 3.1% from the previous month. But in today’s report from the National Association of Realtors® (NAR), pending home sales, that is homes that have gone under contract but have not yet closed, were down 4.9% from December.
Two out of the four regions saw an increase, but overall the results were dragged down by poor showings in the Midwest and South. NAR’s Pending Home Sales Index came in at 74.3 for January. An index of 100 equates to the level of activity in 2001. January’s index was down 8.8% from a year earlier.
"The job market is solid, and the country's total wealth reached a record high due to stock market and home price gains," said NAR Chief Economist Lawrence Yun. "This combination of economic conditions is favorable for home buying. However, consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that's impacting home sales."
While mortgage rates are playing an outsized role in many people’s decision to buy a home right now, you don’t need to wait them out. Talk to a loan officer about ways to make your mortgage more affordable.
Regional breakdown
Yun notes how regional differences in job growth were reflected in the pending home sales numbers. "Southern states and those in the Rocky Mountain time zone experienced faster job growth compared to the rest of the country. As a result, long-term housing demand is increasing more significantly in these regions. However, the timing and number of purchases will largely depend on the prevailing mortgage rates and inventory availability."
Here’s how the pending home sale numbers broke out by region:
- Northeast: up 0.8% to 63.6, down 5.5% from January 2023
- Midwest: down 7.6% to 73.7, up 11.6% from January 2023
- South: down 7.3% to 88.5, up 9.0% from January 2023
- West: up 0.5% to 61.1, down 7.0% from January 2023
In a challenging mortgage rate environment like January, it’s helpful to remember the old adage of “date the rate, marry the house.” Another way to make the most of market right now is by working with a local loan officer. They can help you make the most of current market conditions.
Source: https://www.nar.realtor/newsroom/pending-home-sales-receded-4-9-in-january
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