Pending home sales rose in January, making it 21 consecutive months for pending sales to rise above year-ago levels, according to the National Association of Realtors. There were healthy monthly gains in all regions but the West, which is constrained by limited inventory — but it still improved slightly.
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, increased 4.5 percent to 105.9 in January from a downwardly revised 101.3 in December and is 9.5 percent above January 2012 when it was 96.7. The data reflect contracts but not closings.
The January index is the highest reading since April 2010 when it hit 110.9, just before the deadline for the homebuyer tax credit. Aside from spikes induced by the tax credits, the last time there was a higher reading was in February 2007 when it reached 107.9.
“Favorable affordability conditions and job growth have unleashed a pent-up demand,” said Lawrence Yun, NAR chief economist. “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.”
Yun said he expects total housing sales to be higher in 2013 than 2012, but he doesn’t expect the increase to be as dramatic. However, he expects price increases this year to beat 2012.
The PHSI in the Northeast rose 8.2 percent to 84.8 in January and is 10.5 percent higher than January 2012. In the Midwest, the index increased 4.5 percent to 105.0 in January and is 17.7 percent above a year ago. Pending home sales in the South rose 5.9 percent to an index of 119.3 in January and are 11.3 percent higher January 2012. In the West, the index edged up 0.1 percent in January to 102.1 but is 1.5 percent below a year ago.
Yun expects approximately 5.0 million existing-home sales this year. 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.
This article was contributed to The Log by Florida Realtors.