A national index that tracks pending home sales fell 8.9 percent in January compared to the same month last year and dropped 4.1 percent compared to December 2006, the National Association of Realtors trade group reported today.
The association blamed the drop on frigid weather. In December, the index got a boost from unusually mild weather.
The Pending Home Sales Index, based on pending sales of existing homes, dropped from 119.3 in January 2006 to 108.7 in January 2007. A sale is listed as pending when the contract has been signed and the transaction has not closed, and pending sales typically are finalized within one to two months of signing.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined and the first of five consecutive record years for existing-home sales, the association reported.
“There has been a narrowing trend from year-ago levels since last July when the index was 14.7 percent lower than a year earlier,” according to the announcement.
David Lereah, NAR’s chief economist, said in a statement, “As a result of these weather disruptions, it may take a couple months for the picture to fully clarify, but a modest recovery is likely. “The rapid shift in January to frigid air in much of the country had a cooling affect on home shopping that went beyond normal seasonal factors.”
December’s index rose 4.5 percent, which was the largest increase since a 6.1 percent jump in March 2004.
Regionally, the index fell 11.8 percent in the South, 10.8 percent in the Midwest, 7 percent in the West and 1.3 percent in the Northeast in January compared to the same month last year.
The Pending Home Sales Index is based on a large national sample that typically represents about 20 percent of transactions for existing-home sales.
The association noted that every January it conducts a review of seasonal-activity factors and fine-tunes historic data for the previous three years based on recent findings. The association has revised monthly index readings for 2004-06.