After hitting to its lowest level since early 2014 last month, pending home sales rebounded in January.
The Pending Home Sales Index (PHSI), reported by the National Association of Realtors (NAR), is a forward-looking indicator based on signed contracts. The PHSI increased 4.6% from 98.7 in December to 103.2 in January, but was still 2.3% below the level one year ago, marking the thirteenth straight month of declines on an annualized basis.
NAR described the change in Federal Reserve policy and the end of government shutdown provided a boost to the housing market. With the falling mortgage rates, NAR expected more homebuyers would return to the market to take the advantage of lower borrowing cost and bring an expected increase to pending home sales.
Regionally, the January PHSI rose in all four regions, ranging from an increase of 0.3% in the West to 8.9% in the South. Year-over-year, the PHSI fell in the Midwest, South and West by 0.3%, 3.1% and 10.1% respectively, while rose 7.6% in the Northeast.
Though existing sales continued to drop in January, builder confidence rose by four points in February due to the gradual decline in mortgage rates and solid job market, indicating builders remained positive for the upcoming months.