A report released by the National Association of Realtors on Thursday unexpectedly showed a substantial pullback by pending home sales in the U.S. in the month of January.
NAR said its pending home sales plunged by 4.9 percent to 74.3 in January after surging by 5.7 percent to a revised 78.1 in December.
Economists had expected pending home sales to increase by 1.0 percent compared to the 8.3 percent spike originally reported for the previous month.
“The job market is solid, and the country’s total wealth reached a record high due to stock market and home price gains,” said NAR Chief Economist Lawrence Yun. “This combination of economic conditions is favorable for home buying.”
He added, “However, consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales.”
The sharp pullback by pending home sales largely reflected steep drops in the Midwest and South, where pending home sales plummeted by 7.6 percent and 7.3 percent, respectively.
Meanwhile, the report said pending home sales in the Northeast climbed by 0.8 percent, while pending home sales in the West rose by 0.5 percent.
“Southern states and those in the Rocky Mountain time zone experienced faster job growth compared to the rest of the country,” said Yun. “As a result, long-term housing demand is increasing more significantly in these regions.”
He added, “However, the timing and number of purchases will largely depend on the prevailing mortgage rates and inventory availability.”
The Commerce Department released a separate report on Monday showing a continued rebound in new home sales in the U.S. in the month of January, although the increase fell short of economist estimates.
The report said new home sales climbed 1.5 percent to an annual rate of 661,000 in January after surging by 7.3 percent to a revised rate of 651,000 in December.
With the increase, new home sales continued to regain ground after hitting their lowest level in a year in November.
However, economists had expected new home sales to jump by 2.4 percent to a rate of 680,000 from the 664,000 originally reported for the previous month.
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