The number of people signing contracts to buy homes tumbled to a new low in January.
The number of people signing contracts to buy homes tumbled to a new low in January, as jittery homebuyers sat on the sidelines awaiting passage of President Obama’s stimulus package, the National Association of Realtors in Washington reported today.
Indeed, NAR’s pending home sales index fell to 80.4 in January, down 7.7% from a revised reading of 87.1 in December, and down 6.4% from 85.9 a year ago. The January data falls short of economists’ expectations of 85.1 and is at the lowest level the index has recorded since NAR began tracking the sales in 2001.
Uncertainty over the stimulus package and the deepening recession made homebuyers reluctant to jump into the market, Lawrence Yun, NAR’s chief economist, said in a statement. “Even with many serious potential homebuyers on the sidelines awaiting passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales,” he said.
Mr. Yun said he doesn’t expect this scenario to change in the near term.
“We expect similarly soft home sales in the near term, but buyers are expected to respond to much-improved affordability conditions and from the $8,000 first-time buyer tax credit,” he said.
Charles McMillan, NAR’s president and a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, noted that falling home prices and low interest rates have made houses affordable. “Housing affordability is at a record high,” he said. “With the drop in interest rates, a median-income family can afford a home costing $20,000 more than a year ago for the same monthly mortgage payment.”
Mr. McMillan said he’s “hopeful” that prices will stabilize in many areas by the end of the year.
Mr. Yun said he expects sales to turn around by late spring or early summer.
