Unseasonably warm weather in many parts of the country has given home sales a welcome boost this winter, a trend that will likely continue as the employment outlook improves and housing affordability remains at record levels, according to a new report.
Contracts to purchase previously owned homes surged to a near two-year high in January, according to the National Association of Realtors, reaching levels not seen since last January, when would-be home buyers scrambled to take advantage of the expiring home buyer tax credit. Contract signings are considered a leading indicator of home sales, which are finalized a month or so later.
"The trend in contract activity implies we are on track for a more meaningful sales gain this year," Lawrence Yun, NAR chief economist, said in a statement. "[J]ob gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery."
Tight credit remains a huge stumbling block for the housing market, Yun said, and only when would-be buyers can get mortgages more easily will home sales get a more significant bump.
"If and when credit availability conditions return to normal, home sales will likely get a 15 percent boost, speed up the home-price recovery, and thereby significantly reduce the number of homeowners who are underwater," Yun added.
Pending home sales saw the biggest jump in the South where contract activity was up 10.5 percent from a year ago, followed by the Northeast, which saw an increase of about 10 percent over last year's numbers. Contract activity in the Midwest and West declined over the last month, but still came out positive for the year.