The NAR pending home sales index for January sees a jump of 8.1 percent to 82.5 after a small revision lower to 76.3 in December. The increase is well above the consensus of up 1.0 percent in an Econoday survey. The index is up for a second month in a row and reflects homebuyers signing contracts to buy an existing property as mortgage rates were a little lower than in October and November 2022, and before further Fed rate hikes threatened to drive them higher. However, the index is 24.1 percent below a year ago, pointing to much reduced activity after the recent boom fueled by high demand and low rates.

The NAR report noted that the industry group anticipates the US economy"will continue to add jobs throughout 2023 and 2024, with the mortgage rate steadily dropping to an average of 6.1 percent in 2023 and 5.4 percent in 2024". NAR Chief Economist said,"Home sales activity looks to be bottoming out in the first quarter of this year, before incremental improvements will occur," Yun said."But an annual gain in home sales will not occur until 2024. Meanwhile, home prices will be steady in most parts of the country with a minor change in the national median home price."

Pending home sales may not weaken too far in February when the next report is released at 10:00 ET on Wednesday, March 29. Some homebuyers may have pre-qualified for a mortgage and locked in a lower rate, but not yet signed a contract to buy.

After rebounding a sizable 2.5 percent in December, the first gain since May last year, pending home sales in January are expected to rise a further 1.0 percent.

The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. Specifically, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the pending home sales index which measures home resales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Even though home resales don't always create new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month.

Since the economic backdrop is the most pervasive influence on financial markets, home resales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.

The National Association of Realtors moved up its publication schedule in 2011. Prior to 2011, the reference month was two months trailing the release date. In 2011, the reference month trails only by one month to the release month.