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WASHINGTON â€“ Feb. 27, 2015 â€“ Improved buyer demand at the beginning of 2015 pushed pending home sales in January to their highest level since August 2013, according to the National Association of RealtorsÂ® (NAR). All major regions except for the Midwest saw gains.
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, climbed 1.7 percent month-to-month (to 104.2) in January and 8.4 percent year-to-year. It’s the index’s fifth consecutive month of year-over-year gains, and the gain rose a bit in each of those five months.
For the most part, January buyers were able to overcome tight supply to sign contracts at a pace that highlights the underlying demand that exists in today’s market, says Lawrence Yun, NAR chief economist”Contract activity is convincingly up compared to a year ago despite comparable inventory levels,” he says. “The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth.”
Yun says conditions are also more favorable for traditional buyers. All-cash sales and investor sales are both down from a year ago, creating less competition and some relief for buyers who still find a limited number of homes available for sale.
“All indications point to modest sales gains as we head into the spring buying season,” says Yun. “However, the pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices. Appreciation anywhere near double-digits isn’t healthy or sustainable in the current economic environment.”
The PHSI in the Northeast inched up 0.1 percent to 84.9 in January and 6.9 percent year-to-year. In the Midwest, the index decreased 0.7 percent to 99.3 in January but rose 4.2 percent year-to-year.
In the South, pending home sales had their largest increase â€“ up 3.2 percent to an index of 121.9 in January (highest since April 2010) and 9.7 percent year-to-year. The index in the West rose 2.2 percent in January to 96.4 and 11.4 percent year-to-year.
NAR forecasts total existing-homes sales in 2015 to be around 5.26 million, an increase of 6.4 percent from 2014. The national median existing-home price for the year is expected to increase near 5 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.
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