Bargain prices and low mortgage interest rates failed to persuade Americans to go house-buying in January, according to data released this morning by the National Association of Realtors (NAR).
The group’s Pending Home Sales Index slipped 6.7 percentage points to a reading of 80.1 compared to December 2008. On an annual basis, January’s numbers are 5.5 percentage points lower than the same month one year ago. These figures represent the lowest reading in the history of the index, according to NAR, which began tracking pending home sales in this way in 2001.
The primary reasons for buyers’ reluctance come as no surprise to anyone who has watched the economy deteriorate over the past six months in terms of home prices, job losses, and more. Additionally, the housing tax credit was still under discussion by Congress in January; buyers may have been waiting for the final details on that credit before making any home-buying decisions.
Still, it remains a difficult housing market for buyers and sellers, as NAR Chief Economist Lawrence Yun acknowledged. “Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales,” he said in his comments on January’s Pending Home Sales Index. “We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions and from the $8,000 first-time buyer tax credit.”
Alison Rice is senior editor, online, at BUILDER magazine.