The National Association of Realtors’ leading indicator of future existing home sales rose 4.5% in January to the highest level in nearly three years.
But the trade group has trimmed its sales forecast for 2013 due to the low inventory of previously owned homes on the market.
NAR economists are forecasting existing home sales will hit 5 million in 2013, up from 4.66 million last year—a 7.3% increase. Several months ago the forecast called for 5.1 million sales.
“Over the near term, rising contract activity means higher home sales but total sales for the year are expected to rise less than 2012,” said NAR chief economist Lawrence Yun. Last year, sales rose 12.8% compared to 2011.
Meanwhile, tight inventories are putting upward pressure on prices. “We’re experiencing the strongest price growth in seven years,” Yun said. And price growth in 2013 could exceed 7% if inventory supplies remain low.
NAR’s pending sales index is based on signed contracts, which usually translates into actual sales in a month or two.
The PSI rose to 105.9 in January from a downwardly revised 101.3 in December. The last time the index was at this level was in April 2010 when the index registered 110.9.
In January, the PSI rose in the Northeast, Midwest and South. But it was flat in the West.