Pending home sales jump by most in more than nine years
Contract signings for existing homes surged in January, rising the most since October 2010 after slumping a month earlier, adding to signs of more momentum in the housing market.
An index of pending home sales increased 5.2% from the prior month, according to National Association of Realtors data Thursday that exceeded the median forecast in a Bloomberg survey of economists. Contract signings rose 6.7% from a year earlier on an unadjusted basis.
The rebound from the steepest drop in almost a decade is the latest sign housing remains supported by mortgage rates hovering around a three-year low as well as a solid job market and steady pay gains. Further stabilization in residential real estate may foreshadow a more robust spring selling season that could support economic growth for yet another quarter.
Federal Reserve interest-rate cuts have helped push mortgage rates down, and plunging government bond yields may help to keep borrowing costs low. The 30-year Treasury yield sank to an all-time low this week amid rising concern about the global economic fallout of the coronavirus.
Other housing data including construction and new-home sales have strengthened recently. Sales of existing properties remained solid in January, while new-home sales reached the strongest pace since mid-2007.
"This month's solid activity — the second-highest monthly figure in over two years — is due to the good economic backdrop and exceptionally low mortgage rates," Lawrence Yun, NAR's chief economist, said in a statement. "We are still lacking in inventory."
December contract signings were revised to a 4.3% decline from a previously reported 4.9% drop.
Signings last month increased in all regions but the West. The index of pending sales jumped 8.7% in the South, the biggest region, to the highest level since March 2006.
Forecasts for monthly pending home sales in the Bloomberg survey ranged from gains of 1% to 6%. The median estimate was 3%.