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 fell 2.8% from 126.4 in December to 122.8 in January, a six-month low but the highest level for January. However, on a year-over-year basis, sales were still 13.0% higher than a year ago.
Regionally, South was the only region to experience an increase in January, with a 0.1% gain. The PHSI in the Northeast, Midwest and South declined 7.4%, 0.9% and 7.8% respectively. On a year-over-year basis, all four regions saw year-over-year growth, ranging from 8.6% in the Midwest to 17.1% in the South.
Despite the declines in recent months, housing demand remains strong due to low mortgage rates and increased buyer interest in low-density areas. Meanwhile, single-family starts have increased for eight straight months in 2020, which could help to ease some of the supply-demand imbalance. However, housing production softened in January as rising lumber prices continue to affect the housing industry.