After plunging further in December, January Pending Home Sales rebounded more than expected (+4.6% MoM vs +1.0% MoM exp) but remains lower YoY for the 13th straight month.
“A change in Federal Reserve policy and the reopening of the government were very beneficial to the market,” NAR Chief Economist Lawrence Yun said in a statement.
“Homebuyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers.”
On a Year-over-year basis, the rebound left Pending Home Sales down just 2.27% YoY, but that is still the 13th annual drop in a row...
The improvement signals buyers are returning to the market to take advantage of borrowing costs that have declined from an eight-year high in November, while the end of the partial government shutdown in late January may be encouraging buyers who were otherwise hesitant.
Bloomberg notes that the data also are in line with a jump in mortgage applications in January, and the Federal Reserve’s decision to be patient on interest-rate hikes may help sustain demand. U.S. employers in January also added jobs at the fastest rate in almost a year, supporting demand for major purchases such as homes.