Pending Home Sales Index Hits Record Low

Rising home prices, high mortgage rates, limited inventory, and extreme winter weather led to a record drop in pending home sales this January.

New data from the National Association of Realtors (NAR) shows that pending home sales fell sharply in January, hitting an all-time low. The Pending Home Sales Index (PHSI), which tracks contract signings, dropped 4.6% to 70.6—a significant decline from previous months. Year-over-year, pending transactions fell 5.2%.

Regional Breakdown

• South: Experienced the steepest drop, with the PHSI falling 9.2% to 81.0, an 8.8% decline from January 2024.

• Midwest & West: Saw month-over-month declines.

• Northeast: The only region to record a slight increase in contract activity.

  
  

Why the Drop?

Experts point to affordability challenges as a key factor, with high home prices and elevated mortgage rates making it difficult for buyers to move forward. Economic uncertainty, limited inventory, and extreme winter weather may have also contributed to the slowdown.

Looking Ahead

Despite the dip in contract signings, even a small reduction in mortgage rates could bring buyers back to the market. With rising incomes, job growth, and increasing inventory, some industry leaders expect renewed activity in the coming months.