January Pending Home Sales Slump 2.5%

The National Association of Realtors (NAR) Monday morning released its data on pending sales of existing homes for January. The pending home sales index declined by 2.5% to 106 from an upwardly revised December reading of 108.7. The January reading is up 1.4% year over year.

The consensus estimate called for a month-over-month increase of 0.5% in pending sales. The index reflects signed contracts, not sales closings. An index reading of 100 equals the average level of contract signings during 2001.

The index has been above 100 (the “average” reading) for 17 straight months.

The NAR’s chief economist noted:

While January’s blizzard possibly caused some of the pullback in the Northeast, the recent acceleration in home prices and minimal inventory throughout the country appears to be the primary obstacle holding back would-be buyers. Additionally, some buyers could be waiting for a hike in listings come springtime.

First-time buyers in high demand areas continue to encounter instances where their offer is trumped by cash buyers and investors,” adds Yun. “Without a much-needed boost in new and existing-homes for sale in their price range, their path to homeownership will remain an uphill climb.

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2016 existing home sales are forecast rise about 2.5% to around 5.38 million, up from a pace of 5.34 million in 2015. The national median existing home price for all of this year is expected to rise by 4.0% to 5.0%. In 2015, existing home sales rose 6.3% and prices rose 6.8%.

By region, January pending home sales decreased by 3.2% to an index score of 94.5 in the Northeast, 10.9% higher than in January of 2015. In the South, sales rose by 0.3% to an index score of 121.1 but are now 1.4% lower than the January 2015 index.

Sales dropped by 4.5% in the West to an index score of 96.5 but remain up 0.4% compared with January 2015. Sales in the Midwest fell 4.9% to a January index score of 101.1, 1.4% higher than January 2015.