U.S. Pending Home Sales Jump by Most in More Than Nine Years

(Bloomberg) -- Contract signings for existing U.S. homes surged in January, rising the most since October 2010 after slumping a month earlier, adding to signs of more momentum in the housing market.

An index of pending home sales increased 5.2% from the prior month, according to National Association of Realtors data Thursday that exceeded the median forecast in a Bloomberg survey of economists. Contract signings rose 6.7% from a year earlier on an unadjusted basis.

Key Insights

• The rebound from the steepest drop in almost a decade is the latest sign housing remains supported by mortgage rates hovering around a three-year low as well as a solid job market and steady pay gains. Further stabilization in residential real estate may foreshadow a more robust spring selling season that could support economic growth for yet another quarter.
• Federal Reserve interest-rate cuts have helped push mortgage rates down, and plunging government bond yields may help to keep borrowing costs low. The 30-year Treasury yield sank to an all-time low this week amid rising concern about the global economic fallout of the coronavirus.
• Other housing data including construction and new-home sales have strengthened recently. Sales of existing properties remained solid in January, while new-home sales reached the strongest pace since mid-2007.

Official’s View

“This month’s solid activity -- the second-highest monthly figure in over two years -- is due to the good economic backdrop and exceptionally low mortgage rates,” Lawrence Yun, NAR’s chief economist, said in a statement. “We are still lacking in inventory.”

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• December contract signings were revised to a 4.3% decline from a previously reported 4.9% drop.
• Signings last month increased in all regions but the West. The index of pending sales jumped 8.7% in the South, the biggest region, to the highest level since March 2006.
• Forecasts for monthly pending home sales in the Bloomberg survey ranged from gains of 1% to 6%. The median estimate was 3%.

To contact the reporters on this story: Jeff Kearns in Washington at jkearns3@bloomberg.net;Reade Pickert in Washington at epickert@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Margaret Collins

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