By Brian Cushing of The Cushing Team

Contract signings for existing homes surged in January while the latest appreciation data for December addressed concerns about a housing bubble.

Pending Home Sales rose 8.1% from December to January, which was much stronger than expectations and follows the 1.1% gain in December. Sales were down 24.1% from a year earlier, though this was an improvement from the 33.9% annual decline in December’s report. Pending Home Sales is a critical report for taking the pulse of the housing market. It is considered a forward-looking indicator of home sales because it measures signed contracts on existing homes, which represent around 90% of the market.
What’s the bottom line? While January is not known to be a strong housing month, this year it brought a considerable increase in activity as rates moved lower. Lawrence Yun, Chief Economist for the National Association of Realtors, confirmed, “Buyers responded to better affordability from falling mortgage rates in December and January.”
Rates did rise following the Jobs Report for January that was released on February 3, which was stronger than expected due in large part to seasonal adjustments made to the data. If upcoming economic data shows cooling inflation or weakness in the economy, the recent move higher in rates could reverse course. Expect another rebound in housing activity if this occurs. 
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