The Pending Home Sales Index decreased 2.8% in January 2017 to its lowest level in a year, although it remained 0.4% above last January. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR), decreased to 106.4 in January from an upwardly revised 109.5 the previous month.
The PHSI increased 2.3% in the Northeast and 0.4% in the South, but fell 5.0% in the South and 9.8% in the West. Year-over-year, the PHSI increased 3.6% in the Northeast and 2.0% in the South, but decreased 0.4% in the West and 3.8% in the Midwest.
January existing sales were strong to begin the year, and new home sales posted an increase as well. However, supply shortages continue to suppress sales. Higher mortgage rates lowered housing affordability and bridled sales. However, as the economy adds jobs, increased demand among first-time buyers will help fuel existing sales in 2017.