Pending home sales cool to 3-year low
The winter freeze hit the housing market in January with pending sales reversing a three-month upward trend.
The National Association of Realtors says that all major regions saw a drop in contract signings on both a monthly and annual basis.
NAR’s Pending Home Sales Index was down 4.7% in January compared to December, and at a reading of 104.6 is 3.8% below January 2017 and at its lowest level since October 2014 (104.1).
Mortgage rates rising, and the stubbornly low inventory of available homes was to blame; during a period when sales should be rising along with economic and employment growth.
"The lower end of the market continues to feel the brunt of these supply and affordability impediments,” said NAR chief economist Lawrence Yun. “With the cost of buying a home getting more expensive and not enough inventory, some prospective buyers are either waiting until listings increase come spring or now having to delay their search entirely to save up for a larger down payment."
Available homes were down 9.5% compared to January 2017 but Yun says some investors may be tempted to list homes due to slow rent rises in some markets.
Despite the figures, the intention of homebuyers is still strong with Realtors reporting a year-over-year increase in buyer traffic, although not in the Northeast due to the inclement weather.