Kevin Sears President | Official website
Pending home sales in the United States decreased by 4.6% in January, according to data from the National Association of REALTORS (NAR). The decline was noted across most regions, with the Midwest, South, and West experiencing reductions in transactions. The Northeast, however, saw a slight increase. Year-over-year figures showed contract signings fell in all four regions, with the South recording the largest decrease.
The Pending Home Sales Index (PHSI), which is based on contract signings and serves as a forward-looking indicator of home sales, dropped to 70.6 in January. This marks an all-time low for the index. Compared to last year, pending transactions were down by 5.2%. An index value of 100 corresponds to the level of contract activity seen in 2001.
"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," stated Lawrence Yun, NAR Chief Economist. He also noted that "elevated home prices and higher mortgage rates strained affordability."
Mortgage rates during January ranged from 6.91% to 7.04%, affecting housing affordability. The monthly mortgage payment on a $300,000 home increased by $50 compared to one year ago.
Breaking down regional performance:
- The Northeast PHSI rose by 0.3% from December to reach 63.4 but was still down by 0.5% compared to January 2024.
- In the Midwest, the index fell by 2.0% to 72.8 and was down by 2.7% year-over-year.
- The South experienced a significant drop of 9.2%, bringing its index to 81.0—a reduction of 8.8% from last year.
- The West saw a decrease of 1.2%, with its index at 57.6—down by 4.5% from January of the previous year.
"Even a slight reduction in mortgage rates will likely ignite buyer interest given rising incomes, increased jobs and more inventory choices," Yun added.
The National Association of REALTORS represents professionals involved in residential and commercial real estate across America and emphasizes adherence to its Code of Ethics.
