Contract signings registered largest monthly increase since June 2020
- Pending home sales increased for the second consecutive month, up 8.1% from December 2022.
- Month-over-month, contract signings raised in all four U.S. regions.
- Pending home sales dropped in all regions compared to one year ago.
Washington – Home sales improved in Jan. for the second consecutive month, according to the National Association of Realtors. All four U.S. regions posted monthly gains but saw year-over-year drops in transactions. The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, improved 8.1% to 82.5 in Jan. . Year-over-year, pending transactions dropped by 24.1%. An index of 100 is equal to the level of contract activity in 2001.
The South PHSI increased 8.3% to 99.2 in Jan., dipping 24.7% from the prior year.
“Buyers responded to better affordability from falling mortgage rates in Dec. and Jan.,” said NAR Chief Economist Lawrence Yun.
NAR anticipates the economy will continue to add jobs throughout 2023 and 2024, with the 30-year fixed mortgage rate steadily dropping to an average of 6.1% in 2023 and 5.4% in 2024.
With an improving interest rate environment and job gains, Yun still expects annual existing-home sales to drop 11.1% in 2023 to a total of 4.47 million units before jumping 17.7% in 2024 (5.26 million units). NAR projects new-home sales will fall 3.7% year-over-year in 2023 before growing 19.4% in 2024.
“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.”
NAR also predicts median existing-home prices will be stable compared to the previous year for most markets — with the national median home price decreasing by 1.6% in 2023, to $380,100, before regaining positive traction of 3.1% in 2024, to $391,800. It estimates median new-home prices will increase by 1.3% in 2023, to $461,000 and increase by 2.8% in 2024, to $474,000, due to higher costs of land and construction materials.
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