Pending Home Sales Keep Rising

Pending home sales rose in January, reaching their highest level in nearly three years and continuing an ongoing trend of annual increases.

Contracts signed for home purchases were up a seasonally adjusted 4.5 percent from December, according to figures released today by the National Association of Realtors (NAR). That put the NAR’s Pending Sales Index at 105.9, its highest reading since April 2010, when sales were getting a temporary boost from the homebuyer tax credit.

Excluding the tax-credit period, it was the highest the index has been since February 2007.

January’s figures represented a 9.5 percent annual increase over the January 2012 level, marking the 21st consecutive month the pending sales index has risen on an annual basis.

Limited inventory could boost prices

"Favorable affordability conditions and job growth have unleashed a pent-up demand,” said Lawrence Yun, NAR chief economist. “Most areas are drawing down housing inventory, which has shifted the supply/demand balance to sellers in much of the country. It's also why we're experiencing the strongest price growth in more than seven years."

Despite the strong start to the year, Yun says he expects home sales in 2013 will increase at a slower pace than in 2012, while prices should rise due to a tightening inventory. He said he expects existing home sales to total 5.0 million this year, down from the NAR’s previous prediction of 5.1 million. Yun said home prices could rise by 7 percent in 2013 if inventories do not increase.

The figures are for purchases where a Contract has been signed, but the sale not yet closed. Pending sales typically precede actual sales figures by about one to two months.

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