Pending Home Sales Fall for Third Consecutive Month and Were Down Year-Over-Year in January 2022

The National Association of Realtors® (NAR) reported on Friday (2-25-22) that their Pending Homes Sales Index (PHSI), which is based on signed real estate contracts, not actual closings, for existing single-family homes, condominiums, and co-ops, declined -5.7% in January 2022 (from December 2021) to a reading of 109.5. This marks the third consecutive month of declining transactions. Year-over-year contract signings have also declined -9.5%.

An index of 100 is equal to the level of contract activity in 2001.

Of the four major U.S. regions, only the West registered an increase in month-over-month contract activity. All four regions posted a decline in year-over-year activity.

In remarks prepared for the release of January’s PHSI, Lawrence Yun, NAR’s chief economist said, “With inventory at an all-time low, buyers are still having a difficult time finding a home.”

Alongside persistent supply constraints, Yun said house hunters are contending with a number of additional market issues, including escalating home prices and rising interest rates. Rates jumped by nearly a percentage point in January from December, further adding to monthly mortgage costs.

“Given the situation in the market—mortgages, home costs and inventory—it would not be surprising to see a retreat in housing demand,” Yun added.