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U.S. pending home sales jump by most in more than nine years

In this photo from Feb. 20, 2020, a “For Sale” sign stands in front of a newly constructed home in Londonderry, N.H., Thursday, Feb. 20, 2020. Pending home sales in the U.S. increased 5.2 percent over the prior month, according to National Association of Realtors data released Thursday. (Charles Krupa / AP)
By Jeff Kearns and Reade Pickert Bloomberg

Contract signings for existing U.S. homes surged in January, rising the most since October 2010 after slumping a month earlier, adding to signs of momentum in the housing market.

An index of pending home sales increased 5.2% from the prior month, according to National Association of Realtors data Thursday that exceeded the median forecast in a Bloomberg survey of economists.

Contract signings rose 6.7% from a year earlier on an unadjusted basis.

The pending-home-sales news follows the Wednesday announcement that new home sales had risen 7.9%in January, which was the strongest pace since 2007.

The rebound for pending-home sales from the steepest drop in almost a decade is the latest sign housing remains supported by mortgage rates hovering around a three-year low as well as a solid job market and steady pay gains.

Further stabilization in residential real estate may foreshadow a more robust spring selling season that could support economic growth for yet another quarter.

Federal Reserve interest-rate cuts have helped push mortgage rates down, and plunging government bond yields may help to keep borrowing costs low. The 30-year Treasury yield sank to an all-time low this week amid rising concern about the global economic fallout of the coronavirus.

Other housing data including construction and new-home sales have strengthened recently. Sales of existing properties remained solid in January, while new-home sales reached the strongest pace since mid-2007.

“This month’s solid activity – the second-highest monthly figure in over two years – is due to the good economic backdrop and exceptionally low mortgage rates,” Lawrence Yun, NAR’s chief economist, said in a statement. “We are still lacking in inventory.”