WASHINGTON (AP) — There was a 5.2% jump in Americans signing contracts to buy homes in January from the previous month as lower mortgage rates and a solid economy are pushing up demand for housing.
The National Association of Realtors said Thursday that its index of pending sales climbed to 108.8 last month. These contract signings — a barometer of finalized purchases over the next two months — have risen 5.7% over the past year.
“This month’s solid activity – the second-highest monthly figure in over two years – is due to the good economic backdrop and exceptionally low mortgage rates,” said Lawrence Yun, NAR’s chief economist.
“We are still lacking in inventory,” he said, noting December’s and January’s combined supply was at the lowest level since 1999. “Inventory availability will be the key to consistent future gains.”
Pointing to data from active listings at realtor.com®, Yun says the year-over-year increases show a strong desire for homeownership. Markets drawing some of the most significant buyer attention include Fort Wayne, Ind.; San Francisco, Calif.; Sacramento, Calif.; Lafayette, Ind.; and San Jose, Calif.
Homebuyers have benefited from a steady drop over the past year in the average interest charged on a 30-year mortgage. This has improved affordability for buyers with sufficient savings. But sales growth might also be restricted by a historically low inventory of homes for sales and prices that climbing faster than wages.