The extended tax credit wasn’t enough to warm home-buying sentiment, as the winter chill left January’s pending sales slumping. Although, the number did represent an improvement over the previous year – with the Southern US suffering the smallest monthly decrease. Looking ahead, the Spring thaw should spur sales of existing homes, while the nation’s employment picture remains a big factor in sustainable housing recovery. See the following article from HousingWire for more on this.
The extremely harsh winter weather didn’t help pending home sales, and the National Association of Realtors (NAR) expects additional declines in the future.
NAR’s pending home sales index declined 7.6% in January compared to December activity, but remains 12.3% above January 2009’s level. The index is a forward-looking indicator based on contracts signed in January.
“January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit,” said NAR chief economist Lawrence Yun. “Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the US, hampered shopping activity in February.”
The analysis echoes the March Beige Book, which reported the winter weather impacting various sectors of the economy.
Regionally, the biggest decline in pending sales was in the West, where pending sales declined 13.2% from December. However, the pending sales index is 1.4% above its January 2009 level. Pending sales dropped 8.9% from December in the Midwest, and are 11.8% above last year’s level. In the Northeast, the index was down 8.7%, but is 20.5% above a year ago. The South had the smallest decline, at 2.1%, and pending sales are 18% above the January 2009 level.
“We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” Yun said. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.”
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