Contracts to purchase previously owned U.S. homes climbed more than forecast in January, a sign the industry will keep strengthening this year.
The index of pending home resales increased 4.5% to 105.9, the highest level since April 2010, after a revised 1.9% drop the prior month, a report from the National Association of Realtors showed today in Washington. The median forecast in a Bloomberg survey called for a 1.9% advance.
Home buying is coming within reach of more Americans as mortgage rates close to a record low and gains in employment bring more people into the market. Faster hiring and fewer foreclosures would ensure a more sustained rebound in housing, boosting its contribution to the world’s largest economy.
“Things are getting better in housing,” Daniel Silver, an economist at JPMorgan Chase & Co. in New York, said before the report. JPMorgan was the second-best forecaster of pending home sales over the past two years, according to data compiled by Bloomberg. “Low mortgage rates, an improving economy and an improving job market are helping demand. With home prices rising, most people who’d waited for prices to bottom will want to buy now.”
Estimates of 38 economists in the Bloomberg survey ranged from a drop of 1.8% to a rise of 6%. The Realtors’ group revised December data from a previously reported decline of 4.3%.
All four regions saw an increase, today’s report showed, led by an 8.2% jump in the Northeast. Sales rose 4.5% in the Midwest, 5.9% in the South and 0.1% in the West.
Compared with a year earlier, pending sales increased 10.4%, before seasonal adjustment, following a 4.7% gain in the 12 months ended in December. The index was projected to rise 8.2%.
Pending home sales are considered a leading indicator because they track contract signings in advance of actual transactions, which are tabulated a month or two later. Sales of existing houses made up about 93% of the housing market last year.
Demand is improving, according to other figures. Purchases of new homes, logged when contracts are signed, jumped in January by the most in two decades to a 437,000 annual pace, the strongest since 2008, the Commerce Department reported. Sales of previously-owned houses climbed to a 4.92 million annual rate in January, and the number of available properties slumped to 1.74 million, the lowest level since 1999, data from the Realtors group showed.
Property values are also recovering. The S&P/Case-Shiller index of home prices in 20 U.S. cities rose in the 12 months to December by the most since July 2006, a report from the group showed yesterday.
Companies in housing-related industries benefiting from the pickup include PulteGroup Inc., the largest U.S. homebuilder by revenue.
“2013 will be a better year for U.S. housing than 2012,” Richard Dugas, chief executive officer of Bloomfield Hills, Michigan-based PulteGroup, said on a Jan. 31 earnings call.
Mohawk Industries Inc., the world’s largest maker of flooring products, projects low mortgage rates, stabilizing home prices, and improving employment should sustain the housing recovery, according to Chief Executive Officer Jeffrey Lorberbaum.