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Bloomberg News
Pending US sales of previously-owned homes unexpectedly declined in January by the most in five months as elevated mortgage rates kept a lid on housing demand.
A gauge of contract signings from the National Association of Realtors® decreased 4.9% to 74.3, after surging to an eight-month high in December. The decline was steeper than all estimates in a Bloomberg survey of economists.
"This combination of economic conditions is favorable for home buying," Lawrence Yun, NAR’s chief economist, said in a statement. "However, consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales."
The index of contract signings decreased 7.3% in the South, the nation’s biggest housing market. Pending sales also fell 7.6% in the Midwest, but climbed 0.8% in the Northeast and 0.5% in the West.
"Southern states and those in the Rocky Mountain time zone experienced faster job growth compared to the rest of the country," Yun said. "As a result, long-term housing demand is increasing more significantly in these regions. However, the timing and number of purchases will largely depend on the prevailing mortgage rates and inventory availability."