Pending home sales rose in January, and have been above year-ago levels for the past 21 months, according to a report released today by the National Association of RealtorsÂ®. There were healthy monthly gains in all regions but the West, which is constrained by limited inventory but was slightly improved.
The Pending Home Sales Index, 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. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The January index is the highest reading since April 2010 when it hit 110.9, just before the deadline for the home buyer 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.
Lawrence Yun, NAR chief economist, said inventory is the key to this year’s housing market. “Favorable affordability conditions and job growth have unleashed a pent-up demand. 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,” he said.
Yun expects approximately 5 million existing-home sales this year and price growth could exceed a 7 percent gain projected for 2013 if inventory supplies remain low.
The National Association of RealtorsÂ®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
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