Regionally, pending home sales fell month-over-month in the Northeast (58.2) and South (85.3), dropping 5.7% and 4.5%, respectively. In contrast, pending home sales rose on a monthly basis in the Midwest (71.0) and West (57.9), rising 5.0% and 4.3%, respectively.
Year-over-year, pending home sales were down in the Northeast (-8.3%) and Midwest (-3.3%), but up in the south (4.0%) and West (0.3%).
Despite the national and regional declines, NAR highlighted 10 markets among the 50 largest metro areas that recorded the largest annual price increases in pending home sales in January. These metros included Phoenix-Mesa-Chandler, Arizona (+11.8%), Boston-Cambridge-Newton, Massachusetts-New Hampshire (10.7%), Charlotte-Concord-Gastonia, North Carolina and South Carolina (10.7%), the San Francisco Bay Area (8.9%) and Oklahoma City (8.7%).
While these markets managed to produce strong results, Lawrence Yun, NAR’s chief economist, does not feel improving affordability conditions nationwide have yet to induce more buying activity.
“With mortgage rates nearing 6%, an additional 5.5 million households that could not qualify for a mortgage one year ago would qualify at today’s lower rates,” Yun said in a statement. “Most newly qualifying households do not act immediately, but based on past experience, about 10% could enter the market—potentially adding roughly 550,000 new homebuyers this year compared with last year.”
If these additional buyers do decide to enter the market, Yun warns that the housing supply will need to increase or buyers will be again faced with rising affordability challenges.
Looking ahead, economists do seem to have some reasons to be optimistic about where the housing market is headed.
“It is likely that we will see more home-buying activity over the coming months as inventory improves. Spring is typically the busiest market when homes sell the quickest and offers come in at or above list price. But this year, buyers will have more leverage than they have had in recent years,” Sturtevant said. “Sellers will need to get their home ‘move-in ready’ and priced appropriately if they want a quick sale.”
