The Pending Home Sales Index, a forward-looking indicator based on contract signings, edged up 0.1 percent to 95.0 in January from an upwardly revised 94.9 in December, but is 9.0 percent below January 2013 when it was 104.4.
“Ongoing disruptive weather patterns in much of the U.S. inhibited home shopping,” says Lawrence Yun, NAR chief economist. “Limited inventory also is playing a role, especially in the West, while credit remains tight and affordability isn’t as favorable as it was a year ago.”
The December index reading was the lowest since November 2011, when it stood at 94.6.
The PHSI in the Northeast rose 2.3 percent to 79.0 in January – 5.3 percent below a year ago. In the Midwest, the index declined 2.5 percent to 92.9 in January – 9.3 percent lower than January 2013.
Pending home sales in the South increased 3.5 percent to an index of 111.2 in January – 5.5 percent below a year ago. The index in the West fell 4.8 percent in January to 84.2 – 17.5 percent below January 2013.
Existing-home sales are expected to be weak in the first quarter, but prices continue to rise from limited inventory.
“Increasing new home construction can quickly solve two problems, producing more inventory and taming price growth,” Yun says.
The pace of sales should pick up in the middle part of the year, according to NAR. Total existing-home sales are projected at just over 5.0 million in 2014, slightly below the volume recorded last year. The national median existing-home price is forecast to grow in the range of 5 to 6 percent this year.
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Sarasota Area Real Estate Specialist