NAR: Pending Home Sales Flat In January

Pending home sales were essentially flat in January, rising just 0.1% to reach a score of 95.0 on the National Association of Realtors' (NAR) Pending Home Sales Index, a forward-looking indicator based on contract signings.

Monthly gains in the South and Northeast were offset by declines in the West and Midwest, according to the report.

Still, pending home sales were down 9% compared to January 2013, when they reached a score of 104.4 on the index.

‘Ongoing disruptive weather patterns in much of the U.S. inhibited home shopping,’ says Lawrence Yun, chief economist for NAR, in a statement. ‘Limited inventory also is playing a role, especially in the West, while credit remains tight and affordability isn't as favorable as it was a year ago.’

In December, the index reached its lowest level since November 2011, when it stood at 94.6. The fact that pending home sales were up only 0.1% indicates that home sales have essentially stalled during the past two months.

In the Northeast, pending home sales rose 2.3% in January to reach 79.0 on the index. However, this is about 5.3% below a year ago.

In the Midwest, pending home sales declined 2.5% to reach 92.9 on the index. This was 9.3% lower than January 2013.

In the South, pending home sales increased 3.5% to reach 111.2 on the index; however this is 5.5% below a year ago.

In the West, pending home sales fell 4.8% in January to reach 84.2 on the index. This was 17.5% below January 2013.

NAR predicts that pending home sales will continue to be weak for the remainder of the first quarter, due mainly to rising prices and limited inventory.

‘Increasing new home construction can quickly solve two problems: producing more inventory and taming price growth,’ Yun says.

The pace of sales should pick up in the middle part of the year, NAR says. Total existing-home sales are projected at just over 5 million in 2014, slightly below the volume recorded last year. The national median existing-home price is forecast to grow in the range of 5% to 6% this year.

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