(Kitco News) – Hopes for a stabilizing U.S. housing market were dealt another severe blow after the number of potential home buyers fell beyond expectations again last month, according to the latest data from the National Association of Realtors (NAR).
The U.S. pending home sales index fell 4.6% in January to 70.6 – an all-time low – the NAR announced on Thursday, after December’s revised 4.1% decrease, which was originally reported as -5.5%. The data was far worse than forecasts, as economists expected a 1.3% gain. The Midwest, South, and West all saw month-over-month declines – with the most significant drop in the South – while the Northeast saw a modest gain.
For the year, pending home sales fell 5.2% in January against expectations for a 6.0% increase, and following the unrevised -5.0% decline in December. All four regions posted losses year-over-year, with the South seeing the largest decrease.
“It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months,” said NAR Chief Economist Lawrence Yun. “However, it's evident that elevated home prices and higher mortgage rates strained affordability.”
Spot gold was trying to stabilize in the minutes following the housing data after setting a fresh session low of $2,867.79 shortly after the North American equity open. It last traded at $2,875.82 per ounce for a loss of 1.43% on the day.
The NAR said housing affordability suffered in January as mortgage rates ranged from 6.91% to 7.04%. “Compared to one year ago, the monthly mortgage payment on a $300,000 home increased by an extra $50 to $1,590,” the report noted.
“Even a slight reduction in mortgage rates will likely ignite buyer interest, given rising incomes, increased jobs and more inventory choices,” added Yun.
Economists pay close attention to pending home sales because the report is a leading indicator of existing home sales given that contracts are signed a few months before homes are actually sold.
The U.S. housing market has been trying to stabilize after seeing significant weakness through most of 2023 and early 2024. Many potential home buyers have been priced out of the market due to rising prices and higher mortgage rates.
