Contract signings for existing U.S. homes surged in January, rising the most since October 2010 after slumping a month earlier, adding to signs of more momentum in the housing market.
An index of pending home sales increased 5.2% from the prior month, according to National Association of Realtors data Thursday that exceeded the median forecast in a Bloomberg survey of economists.
These contract signings — a barometer of finalized purchases over the next two months — have risen 5.7% over the past year.
Contract signings rose 6.7% from a year earlier on an unadjusted basis.
Pending home contracts are seen as a forward-looking indicator for the well-being of the housing market because they become sales within a couple of months.
In January, contracts rose across three of the nation's four regions. Pending home sales jumped 8.7% in the South and 7.3% in the Midwest. They also rose 1.3% in the Northeast but fell 1.1% in the West.
"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," Lawrence Yun, the NAR's chief economist, said in a statement.
The rebound from the steepest drop in almost a decade is the latest sign housing remains supported by mortgage rates hovering around a three-year low as well as a solid job market and steady pay gains. Further stabilization in residential real estate may foreshadow a more robust spring selling season that could support economic growth for yet another quarter.
Federal Reserve interest-rate cuts have helped push mortgage rates down, and plunging government bond yields may help to keep borrowing costs low. The 30-year Treasury yield sank to an all-time low this week amid rising concern about the global economic fallout of the coronavirus.
Other housing data including construction and new-home sales have strengthened recently. Sales of existing properties remained solid in January, while new-home sales reached the strongest pace since mid-2007.
“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,” Lawrence Yun, NAR’s chief economist, said in a statement. “We are still lacking in inventory.”
Material from Bloomberg, Reuters and the Associated Press has been used in this report.
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