After reporting a steep drop in pending home sales in the U.S. in the previous month, the National Association of Realtors released a report on Thursday showing pending home sales rebounded by much more than anticipated in the month of January.
NAR said its pending home sales spiked by 5.2 percent to 108.8 in January after plunging by 4.3 percent to a revised 103.4 in December.
Economists had expected pending home sales to surge up by 2.2 percent compared to the 4.9 percent nosedive originally reported for the previous month.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
“This month’s solid activity – the second-highest monthly figure in over two years – is due to the good economic backdrop and exceptionally low mortgage rates,” said NAR chief economist Lawrence Yun.
The bigger than expected rebound in pending home sales partly reflected sharp increases in the South and Midwest, where pending home sales soared by 8.7 percent and 7.3 percent, respectively.
Pending home sales in the Northeast also climbed by 1.3 percent, while pending home sales in the West fell by 1.1 percent.
Citing data from active listings at realtor.com, Yun says the year-over-year increases show a strong desire for homeownership.
“With housing starts hovering at 1.6 million in December and January, along with the favorable mortgage rates, among other factors, 2020 has so far presented a very positive sales climate,” Yun said.
He added, “Moreover, the latest stock market correction could provide exceptional, even lower mortgage rates for a few weeks, and that would help bring about a noticeable upturn in the coming months.”
On Wednesday, the Commerce Department released a separate report showing new home sales in the U.S. jumped to their highest level in over twelve years in the month of January.
The report said new home sales spiked by 7.9 percent to an annual rate of 764,000 in January after jumping by 2.3 percent to an upwardly revised rate of 708,000 in December.
Economists had expected new home sales to surge up by 2.3 percent to an annual rate of 710,000 from the 694,000 originally reported for the previous month.
With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 778,000 in July of 2007.