Pending home sales hit 18-month high in January

Pending home sales in January hit their highest level in 18 months highlighting pent-up buyer demand amid tight housing supply.

The index, which measures contract signings, climbed 1.7 percent to 104.2 in January, the highest level since August 2013, from an upwardly revised 102.5 in December, the National Association of Realtors said Friday. 

{mosads}The level is 8.4 percent higher than January 2014 (96.1), and is the fifth consecutive month of year-over-year gains with each month adding to  the previous month’s gain.

“Contract activity is convincingly up compared with a year ago despite comparable inventory levels,” said Lawrence Yun, NAR chief economist.

“The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth.”

Yun also pointed to more favorable conditions for traditional buyers.

All-cash sales and sales to investors are both down from a year ago, creating less competition and some relief for buyers who still face a limited choice of homes for sale.

“All indications point to modest sales gains as we head into the spring buying season,” Yun said.

“However, the pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices,” he said.

The index was up in three of four regions.

Pending home sales saw their largest increase in the South, up 3.2 percent to 121.9 in January, the highest level since April 2010, and 9.7 percent higher than January last year.

The West’s index rose 2.2 percent in January to 96.4 and is 11.4 percent higher than a year ago.

Meanwhile, the Northeast was up 0.1 percent to 84.9 in January, and is 6.9 percent higher than a year ago.

The index showed a 0.7 percent decrease in the Midwest to 99.3 in January, but still 4.2 percent higher than January 2014.

On the whole, total existing-homes sales this year are forecast to reach 5.26 million, an increase of 6.4 percent from 2014.

The national median existing-home price for the year is expected to increase by about 5 percent.

In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.