Analysts expected a two percent gain in January for pending home sales. By the month’s end, however, the final count more than doubled that. Pending home sales rose 5.2 percent, a success that experts attribute to low mortgage rates and strong economic conditions. January’s numbers were even better when compared to the same time last year, securing a 5.7 percent gain from 2019. Still, conditions such as the drop in the stock market and low existing home sales due to the inventory shortage could push down future figures. But as of now, homebuyers are signing away on contracts that will lead to a closing on their new home.
Pending home sales in January rose 5.2%, the National Association of Realtors said Thursday, crushing analysts’ expectations of a 2% monthly gain. They were 5.7% higher on an annual basis.
“This month’s solid activity — the second-highest monthly figure in over two years — is due to the good economic backdrop and exceptionally low mortgage rates,” said Lawrence Yun, NAR’s chief economist.
Pending sales measure signed contracts, not closings, so they are an indicator of future closings two to three months out.
Very low mortgage rates should be juicing sales more, but the existing home market is struggling with a record low supply of homes for sale, the lowest since 1999. Investors turned about 5 million homes into single-family rentals during the foreclosure crisis, and they continue to be active in the market, as rents are quite favorable.
