WASHINGTON, DC--(Marketwired - Feb 28, 2014) - Pending home sales were essentially unchanged in January, according to the National Association of Realtors®. Monthly gains in the South and Northeast were offset by declines in the West and Midwest.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, edged up 0.1 percent to 95.0 in January from an upwardly revised 94.9 in December, but is 9.0 percent below January 2013 when it was 104.4.
Lawrence Yun, NAR chief economist, said that factors which dampened December activity also were at play in January. "Ongoing disruptive weather patterns in much of the U.S. inhibited home shopping," he said. "Limited inventory also is playing a role, especially in the West, while credit remains tight and affordability isn't as favorable as it was a year ago."
The December index reading was the lowest since November 2011, when it stood at 94.6.
The PHSI in the Northeast rose 2.3 percent to 79.0 in January, but is 5.3 percent below a year ago. In the Midwest the index declined 2.5 percent to 92.9 in January, and is 9.3 percent lower than January 2013. Pending home sales in the South increased 3.5 percent to an index of 111.2 in January, and is 5.5 percent below a year ago. The index in the West fell 4.8 percent in January to 84.2, and is 17.5 percent below January 2013.
Existing-home sales are expected to be weak in the first quarter, while prices continue to rise from limited inventory. "Increasing new home construction can quickly solve two problems, producing more inventory and taming price growth," Yun said.
The pace of sales should pick up in the middle part of the year. Total existing-home sales are projected at just over 5.0 million in 2014, slightly below the volume recorded last year. The national median existing-home price is forecast to grow in the range of 5 to 6 percent this year.
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.
ANNUAL REVISIONS: Each February, NAR Research incorporates a review of seasonal activity factors and fine-tunes the historic seasonally-adjusted monthly index for the past three years based on the most recent findings. Most changes are minor and do not affect past characterizations of the market; there are no changes to unadjusted or annual data.
The revisions are posted at: http://www.realtor.org/topics/pending-home-sales/data
NOTE: Existing-home sales for February will be reported March 20, and the next Pending Home Sales Index will be March 27; release times are 10:00 a.m. EDT.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the "News, Blogs and Videos" tab on the website. Statistical data in this release, as well as other tables and surveys, are posted in the "Research and Statistics" tab.