Weather Continues to Hamper Home Sales

Pendingrnsales changed little from December to January the National Association ofrnRealtors® (NAR) said today.  That is notrnsurprising as the bad weather NAR blamed for the lackluster December pendingrnsales numbers did not change going into January either.</p

NAR’srnPending Home Sales Index (PHSI) inched up 0.1 percent to 95.0 in January whilernthe December number was revised up to 94.9 from the previously announcedrn92.4.  January pending sales were 9.0rnpercent below a year earlier when the PHSI was 104.4.  ThernDecember index reading was the lowest since November 2011 when it stood atrn94.6.</p

Thernindex is a forward looking indicator based on contract signings for homernpurchases.  Transactions are generallyrnexpected to be finalized within 60 days of contract signing.</p

Lawrence Yun, NAR chief economist, confirmed that weatherrnremained a factor in January.  “Ongoingrndisruptive weather patterns in much of the U.S. inhibited home shopping,” hernsaid. “Limited inventory also is playing a role, especially in the West, whilerncredit remains tight and affordability isn’t as favorable as it was a yearrnago.”</p

Monthly gainsrnin the South and Northeast were by offset declines in the West and Midwest.  The PHSI in the Northeast rose 2.3 percent torn79.0 in January, but is 5.3 percent below a year ago. In the Midwest the indexrndeclined 2.5 percent to 92.9 and is 9.3 percent lower than January 2013.rnPending home sales in the South increased 3.5 percent to an index of 111.2 butrnremained 5.5 percent below a year ago. The index in the West fell 4.8 percentrnin from December to 84.2, and is 17.5 percent below January 2013.</p

NAR isrnprojecting that sales of existing home will be weak in the first quarter but pricesrnwill continue to rise because of limited inventory. “Increasing new homernconstruction can quickly solve two problems, producing more inventory andrntaming price growth,” Yun said. </p

Salesrnshould pick up in the middle part of the year and finish just over 5.0 million unitsrnfor the year, slightly below the volume in 2013.  The national median existing-home price isrnforecast to grow in the range of 5 to 6 percent. </p

The PendingrnHome Sales Index is based on a large national sample, typically representingrnabout 20 percent of transactions for existing-home sales. An index of 100 isrnequal to the average level of contract activity during 2001, which was thernfirst year to be examined. By coincidence, the volume of existing-home sales inrn2001 fell within the range of 5.0 to 5.5 million, which is considered normalrnfor the current U.S. population.

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