Signed contracts to buy existing US homes snapped back in January, a sign that buyers returned to the market as a spike in mortgage rates subsided.
The National Association of Realtors said Wednesday its pending home sales index rose 4.6 per cent to 103.2 last month, up from 98.7 in December. All four major regions, led by the south, recorded growth.
Compared to the same month a year earlier, January pending home sales fell 2.3 per cent, the 13th consecutive month of year-over-year declines.
“A change in Federal Reserve policy and the reopening of the government were very beneficial to the market,” said Lawrence Yun, the group’s chief economist.
“Homebuyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers.”
The US housing market struggled for much of 2018. Potential buyers faced rising mortgage rates, elevated prices and a dearth of homes available for sale, while builders wrestled with an increase in labour and commodity costs. New data on Tuesday showed a slower pace of growth in home prices and a sharp decline in housing starts to close the year.
Mortgage rates have retreated from the four-year highs seen in the fall. The average rate on a 30-year fixed mortgage was 4.66 per cent for the week ending on February 15, according to the Mortgage Bankers Association. That is down from a high of 5.17 per cent in November.
Homebuilders have sounded optimistic about the upcoming spring season, and the increase in January contracts bodes well for the real estate sector. Mr Yun said positive pending sales trends will probably continue, citing steadiness in mortgage rates and strong employment numbers. He also noted that income is rising faster than home prices in many areas.