Compass co-founder and CEO Robert Lefkin unlocks existing home sales for “Craman Countdown” in January.
Contracts to buy previously owned homes fell to a record low in January as future buyers were constrained by mortgage fees and higher home prices.
The National Association of Realtors (NAR) said Thursday that the pending home sales index, based on the signed contract, fell 4.6% last month to a record low of 70.6.
The economists voted by Reuters predicted the contract, which reached sales a month or two later, down 1.3% in January. Pending home sales fell 5.2% from a year ago.
“It is unclear whether January of 25, the coldest month of 2015, contributed to a fewer buyers' contributions in the market. If so, we look forward to greater sales activities in the coming months,” said Lawrence Yun, chief economist at NAR. “But it is clear that rising home prices and rising mortgages are strained towards affordability.”
Mortgage rates have fallen for five consecutive weeks, hovering near 7%
Home sales fell to an all-time low in January, according to a report by the National Association of Realtors. (Joe Raedle / Getty Images / Getty Images)
Mortgage rates ranged from 6.91% to 7.04% in January, and NAR pointed out that monthly mortgage payments for $300,000 households increased from an additional $50 to $1,590 compared to a year ago. Since then, the mortgage rate has dropped slightly in February to around 6.85%.
Nationally, the number of signed contracts fell to the Midwest, south and west, but slightly rose in the Northeast.
“Given increased income, increased employment and increased inventory options, a slight reduction in mortgage fees could ignite the profits of buyers,” Yoon added.
Existing home sales will fall to their lowest levels in nearly 30 years
Pending home sales declined in all regions of the country except the Northeast. (Getty Images/David Paul Morris via Getty Images/Bloomberg)
Mortgage rates continue to rise, even as the Federal Reserve cut benchmark interest rates by 100 basis points since September.
The central bank suspended rate cuts in January, but is weighing the impact of the Trump administration's policies on inflation as tariffs, tax cuts and massive deportation on illegal immigrants are seen by economists as potentially driving inflation.
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Mortgage fees track the yield on 10-year Treasury debts. This has been declining recently amid softer economic data. However, while concerns about inflation may limit the scope of the decline, consumer expectations of inflation are attributed to concerns that tariffs will raise the price of the goods.
Reuters contributed to this report.
