The Southern region saw the largest surge
Pending home sales in four major regions edged up in January, according to the National Association of Realtors (NAR).
The Pending Home Sales Index, a forward-looking indicator based on contract signings, reported a 4.6% increase to 103.2 in January, up from 98.7 in December. Year-over-year contract signings, on the other hand, dropped 2.3%. This is thirteenth straight month of annual decreases, according to the report.
NAR chief economist Lawrence Yun had anticipated the home sales increase last month.
"A change in Federal Reserve policy and the reopening of the government were very beneficial to the market," he said.
Three areas out of the four major regions experienced a decline compared to a year ago, while the Northeast enjoyed a slight growth spurt. Yun said higher rates put off many prospective buyers in 2018.
"Homebuyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers," he said.
Data from Realtor.com showed year-over-year increases in active listings, which Yun said illustrated the potential rise in inventory. Denver-Aurora-Lakewood, Colo., Seattle-Tacoma-Bellevue, Wash., San Diego-Carlsbad, Calif., Los Angeles-Long Beach-Anaheim, and Nashville-Davidson-Murfreesboro-Franklin, Tenn., saw the biggest increase in active listings last month compared to one year ago.
Yun also said positive pending home sales figures will likely persist.
"Income is rising faster than home prices in many areas and mortgage rates look to remain steady. Furthermore, job creation will help lift home buying," he said.
Yun predicted that existing-home sales would fall 1.1% from 5.34 million in 2018, to around 5.28 million in 2019. The national median existing-home price this year will increase around 2.2%. In 2018, existing sales declined 3.1% and prices rose 4.9%.
The PHSI in the Northeast grew 1.6% to 94.0 in January, and is currently 7.6% above a year ago. The index in the Midwest rose 2.8% to 100.2 in January but 0.3% lower than January 2018.
Pending home sales in the South went up 8.9% to an index of 119.8 last month, which is 3.1% lower than this time last year. The index in the West increased 0.3% in January to 87.3 and plummeted 10.1% below a year ago.