Tracking the number of signed contracts to buy homes can be a good predictor of future home sales numbers. That’s why the National Association of Realtors keeps a monthly measure of pending home sales. Its Pending Home Sales Index measures the number of contract signings each month and is considered a good forward-looking indicator of where sales are headed. In January, the index saw a 0.8 percent decline from the previous month, dropping 0.4 percent lower than year-before levels. Dr. Lawrence Yun, NAR’s chief economist, says improved affordability conditions have yet to produce buyers. “Improving affordability conditions have yet to induce more buying activity,” Yun said. “An additional 5.5 million households that could not qualify for a mortgage one year ago would quality at today’s lower rates. Most newly qualifying households do not act immediately, but based on past experience, about 10 percent could enter the market – potentially adding roughly 550,000 new home buyers this year compared to last year.” (source)
