Pending Sales Dip as Affordability Gains Fail to Spark Demand

The National Association of Realtors’ Pending Home Sales Index (PHSI) slipped modestly in January, easily prolonging its stay in a narrow range near all-time lows. Pending home sales decreased 0.8% month over month and were down 0.4% compared with the same time last year. While affordability conditions have improved somewhat as mortgage rates trend closer to 6%, the improvement has failed to bolster contract activity. NAR Chief Economist Lawrence Yun noted that lower rates have expanded the pool of mortgage-eligible households, potentially adding hundreds of thousands of new buyers this year. However, he cautioned that without a meaningful increase in housing supply, additional demand could simply push prices higher and renew affordability pressure. The Midwest and West posted monthly gains, while the Northeast and South declined. On a yearly basis however, the picture changes, with the South and West slightly positive and the Northeast and Midwest down from a year ago—reinforcing the fact that sales activity remains uneven and regional. Regional Breakdown (Month-Over-Month) Northeast: −5.7% Midwest: +5.0% South: −4.5% West: +4.3% Regional YoY Change Northeast: −8.3% Midwest: −3.3% South: +4.0% West: +0.3%