From the WSJ:
The number of existing homes tentatively sold across the U.S. fell in January, as swiftly rising prices and lower inventory muted buyer demand after the strongest year in nearly a decade.
An index measuring pending home sales—a gauge of purchases before they become final—fell 2.5% to a seasonally adjusted reading of 106.0 in January, the National Association of Realtors said Monday. An index of 100 is equal to the average level of contract activity during 2001, which the NAR considers a “normal,” or balanced, market for the current U.S. population. In 2015, the index averaged 108.9, a rise of 8.0% over 2014 and its highest level since 2006.
The drop surprised analysts. Economists surveyed by The Wall Street Journal had predicted a 0.5% increase in January’s sales. December’s reading was revised up to 108.7 from an initial reading of 106.8.
“While pending home sales have been weak lately, some other housing indicators—including the mortgage purchase application data reported through most of February—have looked strong, giving us hope that the housing market is continuing to recover,” Daniel Silver, an economist at J.P. Morgan Chase, wrote in an analyst note.
Pending home sales rose 1.4% in January from a year earlier, the 17th straight month the index has increased year over year, but that was its second-smallest annual gain over that period.
Several economists noted January’s blizzard may have dampened activity in the Northeast, but the index fell most in the Midwest and Northwest, declining by 4.9% and 4.5% respectively.
“It’s possible that the drop in the stock market beginning at the start of the year persuaded would-be home buyers to wait a while, but we have no way of knowing for sure,” said Ian Shepherdson, an economist at Pantheon Macroeconomics, in a note to clients. “Alternatively, the severe blizzard in late January might have depressed activity in the northeast, but sales reportedly fell even further in the West, so it’s hard to find a consistent story.”