The number of signed contracts for existing-home purchases moved up in January, bringing the National Association of Realtors’ Pending Home Sales Index up 4.5% for the month compared with December’s downwardly revised figure, for a reading of 105.9. On an annual basis, pending sales were up 9.5%.
Despite the improvement, however, Lawrence Yun, NAR’s chief economist, is downgrading his forecast for the year. He attributes his lowered expectations to tight supply.
“We are beginning to see more states across the country where inventories are shrinking and shrinking and shrinking, and thereby it could begin to hamper home sale transactions,” Yun said in an NAR video interview discussing the numbers today. “I think we may have this persistent shortage of inventory for most of the year.”
Existing-home inventory is at a 13-year low, according to NAR data. But while the shortage of available homes may be negatively impacting sales, it also is lifting prices. In the West, NAR reports that levels of available housing stock are especially low while price appreciation in those states over the past year has been in the double digits. The West also saw the smallest increase in pending home sales last month, edging up only 0.1%, while the Northeast, Midwest, and South saw improvements of 8.2%, 4.5%, and 5.9%, respectively.
Claire Easley is a senior editor at Builder.