The number of houses going under contract soared in January, although the sales volume remains well below last year’s level, data showed Monday.
The National Association of Realtors said its pending home sales index rose 8.1 percent in January, the largest monthly increase since the pandemic snapback in June of 2020.
Economists had forecast a much milder 0.9 percent increase.
Mortgage rates peaked in November and declined in December and January. In February, however, they have retraced about half of that decline.
“Buyers responded to better affordability from falling mortgage rates in December and January,” said Lawrence Yun, NAR’s chief economist.
The National Association of Home Builders (NAHB) said recently that its measure of home builder sentiment significantly improved in February. This was the second month in a row of improving sentiment. The NAHB described the mood of builders as “cautiously optimistic.”
Despite gains in December and January, pending home sales are down 22.4 percent compared with the prior January. Year-over-year gains in sales are not expected until next year, Yun said.
“Home sales activity looks to be bottoming out in the first quarter of this year, before incremental improvements will occur,” Yun said. “But an annual gain in home sales will not occur until 2024. Meanwhile, home prices will be steady in most parts of the country with a minor change in the national median home price.”
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