The Pending Home Sales Index (PHSI), which tracks home sales based on contract signings, dropped 4.6 percent to 70.6 in January, marking an all-time low, while pending transactions fell 5.2 percent year over year.
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Pending home sales have declined from December to January, reaching a record low as high home prices and mortgage rates continue to challenge buyers, according to data released Thursday by the National Association of Realtors (NAR).
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The Pending Home Sales Index (PHSI), which tracks home sales based on contract signings, dropped 4.6 percent to 70.6 in January, marking an all-time low, while pending transactions fell 5.2 percent year over year.
NAR Chief Economist Lawrence Yun attributed the decline to market challenges and potentially seasonal factors, as colder months often slow homebuying activity.
Lawrence Yun | NAR Chief Economist
“It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months,” NAR Chief Economist Lawrence Yun said in a statement. “However, it’s evident that elevated home prices and higher mortgage rates strained affordability.”
In January, mortgage rates ranged between 6.91 percent and 7.04 percent. Fannie Mae economists project that 30-year fixed mortgage rates will remain above 6.5 percent through this year and the next.
Regionally, contract signings declined across all four U.S. regions year over year. Month over month, three regions recorded losses, while the Northeast saw gains.
Pending Home Sales Housing Snapshot | NAR
In the Northeast, the PHSI rose to 63.4 in January, though it was down 0.5 percent from the previous year. In the South, pending sales declined 9.2 percent to 81 in January, marking an 8.8 percent annual decline.
The Midwest PHSI fell 2 percent in January to 72.8, a 2.7 percent decrease from the prior year. The West saw a 1.2 percent drop in January to 57.6, reflecting a 4.5 percent year-over-year decline.
“Even a slight reduction in mortgage rates will likely ignite buyer interest, given rising incomes, increased jobs and more inventory choices,” Yun said.
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