After rising just 0.1% in December, pending home sales decreased 2.5% in January, according to the National Association of Realtors (NAR).
Based on contract signings, pending home sales reached a score of 106.0 on NAR’s Pending Home Sales Index – down from an upwardly revised score of 108.7 in December.
Still, pending home sales in January represented an increase of about 1.4% compared with January 2015, according to NAR.
“While January’s blizzard possibly caused some of the pullback in the Northeast, the recent acceleration in home prices and minimal inventory throughout the country appears to be the primary obstacle holding back would-be buyers,” says Lawrence Yun, chief economist for NAR, in a release. “Additionally, some buyers could be waiting for a hike in listings come springtime.”
Yun says lack of supply and affordability continued to be the main headwinds against home sales. He says conditions won’t meaningfully improve until homebuilders start ramping up production – especially of homes at lower price points.
“First-time buyers in high demand areas continue to encounter instances where their offer is trumped by cash buyers and investors,” Yun says. “Without a much-needed boost in new and existing-homes for sale in their price range, their path to homeownership will remain an uphill climb.”
Pending home sales decreased in all regions in January except for the South.
As of February, NAR was forecasting that existing-home sales for this year would reach an annual pace of about 5.38 million, an increase of 2.5% from 2015.
What’s more, NAR is forecasting that U.S. home prices will increase between 4% and 5% this year.
Existing-home sales increased 6.3% and prices rose 6.8% in 2015, according to NAR’s data.