Pending home sales unexpectedly soar in January as mortgage rates ease

January Pending Home Sales: +8.1% M/M to 82.5 vs. +1.0% consensus and +1.1% in December (revised from +2.5%). That's the second straight month in which the index increased, thanks to a pullback in mortgage rates during the period, the National Association of Realtors said Monday.

Y/Y, pending transactions plunged by 24.1%.

“Buyers responded to better affordability from falling mortgage rates in December and January,” said NAR Chief Economist Lawrence Yun.

“Home sales activity looks to be bottoming out in the first quarter of this year, before incremental improvements will occur,” Yun added. “But an annual gain in home sales will not occur until 2024. Meanwhile, home prices will be steady in most parts of the country with a minor change in the national median home price.”

By region, the Northeast PHSI gained 6.0% to 68.7 M/M in January and fell 19.8% from a year before. The Midwest index rose 7.9% from December to 83.3, a drop of 21.1% from January 2022.

The South PHSI grew 8.3% to 99.2, sliding 24.7% from a year earlier. And the West index drove up 10.1% to 66.2%, decreasing 29.3% from the prior year.

“An extra bump occurred in the West region because of lower home prices, while gains in the South were due to stronger job growth in that region,” Yun noted.

Last week, (Feb. 24) new home sales unexpectedly surged in January.