Pending sales of previously owned homes in January fell to the lowest level since the National Association of Realtors began tracking that data, and the deep freeze that enveloped much of the nation last month may have played a role.
That could translate into a more heated spring homebuying season at a time when shoppers are already hampered by high prices, down payments, closing costs and mortgage rates.
The index the association uses to track contracts to sell single-family homes and condos dipped 4.6% during the month to 70.6. The group measured pending sales at a slightly lower point last July, but it has since revised that figure above January’s reading. The NAR launched its pending sales index in 2001.
Pending sales, which tend to turn into actual sales in 30 to 45 days, also fell 5.5% in December. Contracts were down 5.2% in January from one year earlier. Meanwhile, the average 30-year fixed-rate mortgage, though down slightly, was still close to 7% in recent weeks, discouraging would-be buyers. And the median home price in January was $396,900, up almost 5% from a year ago. "Compared to one year ago, the monthly mortgage payment on a $300,000 home increased by an extra $50 to $1,590," the NAR reported.
“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,” said Lawrence Yun, the NAR's chief economist. “However, it’s evident that elevated home prices and higher mortgage rates strained affordability.”
The South was the region with the steepest drop-off in pending sales in January, falling 9.2%. That part of the country saw a similar decrease a year ago. Two other regions saw more modest declines, 2% in the Midwest and 1.2% in the West, while contracts were up 0.3% in the Northeast. In December, contracts fell steeply in the West, 10.3%, and in the Northeast, just over 8%.
From the Homes.com blog: What does ‘pending’ mean in real estate?
The most recent report on the number of applications to buy homes on Wednesday showed they were about the same as one week earlier.
“Purchase applications were up three percent from the same week last year. Increasing for-sale inventory in some markets has provided prospective buyers more options as we approach the spring homebuying season,” said Joel Kan, the Mortgage Bankers Association’s deputy chief economist.