Pending home sales rose 1.7% in January compared to December to reach their highest level since August 2013, according to the National Association of Realtors (NAR).
What's more, pending home sales increased 8.4% compared to January 2014.
All major regions, except for the Midwest, saw gains in contract signings in January, according to the firm's Pending Home Sales Index.
January was the fifth consecutive month that pending home sales increased on a year-over-year basis, according to NAR.
Lawrence Yun, chief economist for NAR, says that the high number of contract signings in January flies in the face of tighter-than-usual inventory, thus demonstrating that there is pent-up demand for homes.
‘Contract activity is convincingly up compared to a year ago, despite comparable inventory levels,’ Yun says. ‘The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth.’
Yun also points to more favorable conditions for traditional buyers entering the market. All-cash sales and sales to investors are both down compared to a year ago, creating less competition and some relief for buyers who still face the challenge of limited availability.
‘All indications point to modest sales gains as we head into the spring buying season,’ he says. ‘However, the pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices. Appreciation anywhere near double-digits is not healthy or sustainable in the current economic environment.’
Regionally, pending home sales increased 3.2%, month over month, in the South, 2.2% in the West and 0.1% in the Northeast. However, they were down 0.7% in the Midwest.
NAR is forecasting that total existing-homes sales will reach around 5.26 million units in 2015 – an increase of 6.4% compared to 2014.
NAR is forecasting that home prices will increase an average of 5% this year.
In 2014, existing-home sales declined 2.9% and prices rose 5.7%.
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