More homes went under contract in January compared to December and a year ago, according to an index released today from the National Association of Realtors that tracks pending sales of existing U.S. homes.
NAR’s Pending Home Sales Index, which is based on purchase contracts signed but not yet closed, rose 8 percent from January 2011 and 2 percent from a downwardly revised 95.1 percent in December, to 97. According to revised figures, that’s the highest index score since April 2010, just before the deadline for a federal homebuyer tax credit program, when the index was at 111.3.
Lawrence Yun, NAR’s chief economist, said in a statement that "the trend in contract activity implies we are on track for a more meaningful sales gain this year."
"Movements in the index have been uneven, reflecting the headwinds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery," Yun added.
The index typically represents about 20 percent of all existing-home transactions nationally. An index score of 100 is equal to the average level of sales contract activity in 2001, which was the first year examined by the trade group and a robust year for existing-home sales. The national index has not been above 100 since April 2010.
The index rose year over year in all four U.S. regions with the Midwest seeing the highest increase. That region saw a 10.8 percent jump, to 88.1, though the index fell 3.8 percent compared to December.
The South experienced a similar yearly increase in January, 10.5 percent, and the largest monthly increase, 7.7 percent, to 109.1 — the highest index score among the regions.
The index rose 9.8 percent year over year and 7.6 percent month to month in the Northeast, to 78.2 — the lowest index score among the four regions.
Pending sales in the West remained nearly flat in January, with the index rising a slight 0.7 percent on a yearly basis last month, to 101.9. The index fell 4.4 percent from December.
In its latest economic outlook, also out today, NAR projects existing-home sales will rise 6.8 percent to 4.55 million units in 2012, from 4.26 million units in 2011. In 2013, sales are expected to rise 3.3 percent to 4.7 million.
The trade group expects the median price for existing homes to rise a slight 1.1 percent this year, to $168,000, with a subsequent 2.4 percent rise in 2013 to $172,000.
NAR predicts rents will rise 3.3 percent this year, followed by a 3.8 percent increase in 2013.
The forecast also anticipates new-home sales will rise 21.3 percent in 2012 to 370,000, and jump 37.8 percent in 2013 to 510,000. New-home sales fell 5 percent in 2011 to 305,000.
NAR estimates this year’s median price for new-home sales will be $228,000, a 2.1 percent rise from 2011. NAR expects the median will rise 3.5 percent to $236,000 in 2013.
The trade group expects this year’s real gross domestic product growth rate to be 2.4 percent, followed by a rate of 3.1 percent in 2013, up from 1.7 percent in 2011.
NAR expects this year’s unemployment rate to average 8.3 percent, down from 9 percent in 2011, and projects a drop to 7.7 percent in 2013.
The 30-year fixed mortgage rate averaged 4.5 percent in 2011 and will fall to 4.2 percent in 2012 before rising to 4.9 percent in 2013, according to NAR’s projections.