Pending sales of existing homes dipped for the second straight month in January, according to a National Association of Realtors index.
The Pending Home Sales Index, based on purchase contracts signed but not yet closed, is considered to be a leading indicator for future sales. An index score of 100 is the average level of contract activity in 2001, the first year that index data was collected.
The index fell 2.8 percent month-to-month and 1.5 percent year-over-year in January, to 88.9.
Lawrence Yun, NAR’s chief economist, said in a statement, "We should not expect the recovery to be in a straight upward path — it will zig-zag at times."
The South was the only region to see a month-to-month index increase in January, up 1.4 percent to an index score of 97.7. The South also experienced the smallest year-over-year decline, -0.4 percent.
The index fell the most in the Midwest, dropping 7.3 percent month-to-month and 3.2 percent year-over-year, to 78. In the Northeast, the index fell 2.8 percent month-to-month and 1.5 percent year-over-year, to 73.5. In the West, the index fell 5.2 percent month-to-month and 0.9 percent year-over-year.
A new, recently released index from the California Association of Realtors indicated that pending sales in the state were up 13.6 percent month-to-month and down 2 percent year-over-year in January, boding well for the spring.
The latest economic forecast from the National Association of Realtors predicts the median price for existing homes will dip 0.4 percent in 2011, to $172,200, compared with a forecasted 0.5 percent rise in an earlier report.
NAR projects the median existing-home price to drop 3.9 percent in the first quarter of 2011 and 1 percent in the second quarter, followed by modest gains in subsequent quarters and a 3.2 percent increase in 2012.
Existing-home sales are expected to rise 8.1 percent this year, to 5.31 million, and 5.2 percent in 2012, to 5.58 million. Such sales rose for the third straight month in January, partially due to a jump in distressed property sales, investor purchases and all-cash deals.
After a sharp drop in new, single-family home sales nationwide in January, NAR predicts such sales will rise 5.2 percent, to 334,000, in 2011, a more modest increase than the 17.7 percent rise previously estimated. In 2012, new-home sales are estimated to climb 55.7 percent.
NAR projects the median price of new homes will rise 1.8 percent in 2011, to $226,000, followed by a 3.5 percent rise in 2012.
The association expects unemployment to fall from 9.6 percent in 2010 to 9.2 percent in 2011 and 8.4 percent in 2012. Real gross domestic product is expected to decrease to 2.7 percent this year from 2.9 percent last year, and then rise to 3 percent in 2012. The 30-year fixed mortgage rate is estimated to average 5.2 percent this year and rise to 5.9 percent in 2012.
"The broad fundamentals for a housing recovery are developing," Yun said. "Job growth, high housing affordability and rising apartment rent are conducive to bringing more buyers into the market. Some buyers may be looking to real estate as a hedge against potential future inflation."