Pending home sales rose on both a
monthly and an annual basis in January.
The National Association of Realtors® (NAR) which compiled the data said
January was the 21st consecutive month when its Pending Home Sales
Index was higher than one year earlier.
The Index increased 4.5 percent from
101.3 in December to 105.9 and was 9.5 percent above January 2012 when it was
96.7. The Index is a forward looking
indicator based on contract signings for home purchases. The contract is generally expected to convert
to a home sale in about 60 days.
The January index is at the highest
level since just before the deadline for the home buyer tax credit in April
2010 when it hit 111.9 and February 2007
when it reached 107.9 in a less artificial market.
Lawrence Yun, NAR chief economist, said inventory is the key to
this year's housing market. "Favorable affordability conditions and job
growth have unleashed a pent-up demand. Most areas are drawing down
housing inventory, which has shifted the supply/demand balance to sellers in
much of the country. It's also why we're experiencing the strongest price
growth in more than seven years," he said.
"Over the near
term, rising contract activity means higher home sales, but total sales for the
year are expected to rise less than in 2012, while home prices are projected to
rise more strongly because of inventory shortages," Yun said.
were up on a regional basis in all four regions although Yun said that once
again the lack of inventory is constraining activity in the West. That region eked out a 0.1 percent monthly
increase to 102.1 but year-over-year sales were down 1.5 percent. The Index was up 8.2 percent on a monthly
basis and 10.5 percent year-over-year to 84.8 in the Northeast, 4.5 percent and
17.7 percent to 105.0 in the Midwest and 8.9 percent and 11.3 percent in the
South to an index of 119.3.
approximately 5.0 million existing-home sales this year, 543,000 of which will
be new homes. However, price growth could exceed a 7 percent gain
projected for 2013 if inventory supplies remain low. Previously, NAR had
expected 5.1 million existing-home sales in 2013, while prices were forecast to
rise 5.5 to 6.0 percent. The NAR is
also forecasting 1.13 million housing starts this year.
NAR also released the revised
Pending Home Sales Index for all of 2012.
The Index, while experiencing small and occasional decreases trended
fairly steadily upwards through the year, starting at 96.7 in January and
ending the year at 101.3. The high for
the year was 103.8 in October.