Pending Home Sales Crater to All-Time Low Again

A new year brought the same familiar misery to the housing market, at least by one measure.

Pending home sales fell 4.6 percent from the previous month in January, according to a monthly report from the National Association of Realtors. Activity also declined 5.2 percent annually in the first month of the year.

NAR’s pending home sales index, which serves as an indicator of home sales based on contract signings, dropped to 70.6 in January; a score of 100 would mean signings were equivalent to contract activity in 2001. The 70.6 score marked an all-time low.

In a statement, NAR chief economist Lawrence Yun suggested the cold weather could have partially kept buyers at bay last month, but said it was “evident that elevated home prices and higher mortgage rates strained affordability.”

To that end, mortgage rates last month ranged from 6.91 percent to 7.04 percent, a far cry from the low rates of the early pandemic days. The monthly mortgage payment on a $300,000 home, for instance, increased to $1,590 in January, an increase of $50 from a year earlier.

In the Northeast, the pending home sales index actually rose modestly from the previous month, though down slightly from a year earlier. All three of the other regions in the report posted decreases in the index both month-to-month and year-over-year.

Yun predicted that “even a slight reduction in mortgage rates will likely ignite buyer interest, given rising incomes, increased jobs and more inventory choices.”

That relief remains to be seen. Mortgage rates have come down slightly this month, but economists have forecasted President Donald Trump’s tariff and tax cut policies could lead to a rise in mortgage rates as the proposals create a risk of renewed inflation.