Pending home sales activity rose in January, hitting the second-highest monthly figure in over two years, according to the National Association of Realtors.
NAR's Pending Home Sales Index rose 5.2% month over month to 108.8 last month, surpassing the contract activity level of 100 in 2001. On a year-over-year basis, contract signings were up 5.7%.
"This month's solid activity is due to the good economic backdrop and exceptionally low mortgage rates," said Nar Chief Economist Lawrence Yun.
However, Yun noted that housing supply in December and January was at its lowest level since 1999.
"We are still lacking in inventory," he said. "Inventory availability will be the key to consistent future gains."
The markets that attracted the most buyer attention were Fort Wayne, Ind., San Francisco, Calif., Lafayette, Ind., and San Jose, Calif.
"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," Yun said. "Moreover, the latest stock market correction could provide exceptional, even lower mortgage rates for a few weeks, and that would help bring about a noticeable upturn in the coming months."
Three of the four regions reported increased contract activity, with only the West region experiencing a minor decline in month-over-month pending home sales. However, annual pending home sales activity was up in all four regions.
The Northeast PHSI increased 1.3% month over month and 1.2% year over year to 92.9. The Midwest posted a 7.3% increase to 105.3 and was 6.5% higher than a year ago.
In the South, contract activity jumped 8.7% month over month and 7.1% year over year to an index of 129.4. Lastly, pending home sales in the West fell 1.1% in January to 92.6, but climbed 5.5% from January 2019.