Pending Home Sales Fall Nationally—but Rise in Parts of the Country

by Joy Dumandan

Pending home sales in January decreased by 0.8% from the prior month, according to the National Association of Realtors^® Pending Home Sales Report. That's a 0.4% year over year.

Month over month, the number of homes under contract increased in the Midwest and West but declined in the Northeast and South. Year-over-year pending home sales rose in the South and West and declined in the Northeast and Midwest.

"Buyers continue to gravitate toward markets with relatively affordable homes or comparatively abundant inventory," says Hannah Jones, senior economic research analyst at Realtor.com®. "In January, many Southern and Western markets maintained inventory levels above pre-pandemic norms, while much of the Midwest and the Northeast continued to face persistently tight supply."

"However, inventory gains have stalled or reversed in several Southern and Western metros. Discouraged by softer demand, some sellers have opted to delay listing or pull homes from the market while waiting for more favorable spring conditions," Jones adds.

Pending home sales—contract signings between buyers and sellers—mark the first formal step in the homebuying process.

"Typically lead existing-home sales by one to two months, making them a useful gauge of near-term activity," Jones explains.

NAR's chief economist points out that mortgage rates have stayed near 6%, but, so far, it hasn't been enough to spur more homebuying.

Mortgage rates for a 30-year fixed home loan stand at 6.09% for the week ending Feb. 12, according to Freddie Mac.

"With mortgage rates nearing 6%, an additional 5.5 million households that could not qualify for a mortgage one year ago would qualify at today’s lower rates," says NAR Chief Economist Lawrence Yun. "Most newly qualifying households do not act immediately, but based on past experience, about 10% could enter the market—potentially adding roughly 550,000 new homebuyers this year compared with last year.”

Breakdown by region

Northeast

5.7% decrease month over month
8.3% decrease year over year

Midwest

5% increase month over month
3.3% decrease year over year

South

4.5% decrease month over month
4% increase year over year

West

4.3% increase month over month
0.3% increase year over year

"December’s weak pending sales translated into a decline in January existing home sales, which fell both month over month and year over year," says Jones.

"January’s pending data points to a steadier start to the year. Still, despite modest support from lower mortgage rates and gradually improving supply, the housing market remains in low gear, with both buyer and seller activity subdued."

There were several local markets that saw year-over-year gains, including Phoenix–Mesa–Chandler, AZ (+11.8%); Boston–Cambridge–Newton, MA-NH (+10.7%); Charlotte–Concord–Gastonia, NC-SC (+10.7%); San Francisco–Oakland–Fremont, CA (+8.9%); and Oklahoma City, OK (+8.7%).