Jump in Contract Signings Bodes Well For Spring Home Buying Season

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Will the sun, moon and stars align for a stellar spring home buying season?

Will mortgage rates remain stable – or perhaps further decrease – as we move into March and April? Will wages continue to rise as the job market continues to grow? Will home price appreciation moderate or, in some instances, reverse, improving affordability conditions?

And will home builders ramp up production to bring more inventory online?

If all of these things happen, housing experts say, it could result in a major rebound in home sales, which were lackluster in December and January.

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In fact, it might already be happening: According to the National Association of Realtors (NAR), pending home sales rebounded in January, rising 4.6% compared with December to reach a score of 103.2 on NAR’s Pending Home Sales Index.

However, that’s down 2.3% compared January 2018.

Still, some analysts are forecasting that pent-up demand resulting from the slowdown in December and January could result on a surge of home-buying activity in the months to come.

“A change in Federal Reserve policy and the reopening of the government were very beneficial to the [housing] market [in January],” says Lawrence Yun, chief economist for NAR, in a statement. “Homebuyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers.”

Regionally, contract signings increased 8.9% in the South, 2.8% in the Midwest, 1.6% in the Northeast and 0.3% in the West, month-over-month.

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Year-over-year, contract signings were up 7.6% in the Northeast, but were down 0.3% in the Midwest, 3.1% in the South and 10.1% in the West.

Yun notes year-over-year increases in active listings from data at realtor.com to illustrate the potential rise in inventory.

Markets where active listings increased from a year ago included Denver-Aurora-Lakewood, Colo.; Seattle-Tacoma-Bellevue, Wash.; San Diego-Carlsbad, Calif.; Los Angeles-Long Beach-Anaheim; and Nashville-Davidson-Murfreesboro-Franklin, Tenn.

Yun says he expects to see pending home sales increase as we move into the early spring.

“Income is rising faster than home prices in many areas and mortgage rates look to remain steady,” he says. “Furthermore, job creation will help lift home buying.”

Yun currently forecasts that existing-home sales in 2019 will reach 5.28 million – down 1.1% from 2018.

The national median existing-home price will increase about 2.2%.

In 2018, existing home sales decreased 3.1% and prices increased 4.9%.

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