The NAR's pending home sales index is down 4.6 percent in January to 70.6 after 74.0 in December and down 5.2 percent compared to 74.5 in January 2024. The January decline is below the consensus of down 1.2 percent in the Econoday survey of forecasters. The report includes annual revisions. The index is down in three of four regions and up only marginally in one. The index for the Northeast is up 0.3 percent, while falling 2.0 percent in the Midwest, 9.2 percent in the South, and 1.2 percent in the West.

The report noted that January 2025 was the coldest in 21 years which may have contributed to decreased buyer traffic and contracts for sales on existing units. NAR Chief Economist Lawrence Yun said, If so, expected greater sales activity in the coming months. However, it's evident that elevated home prices and higher mortgage rates strained affordability.

The Freddie Mac weekly rate for a 30-year fixed rate mortgage reached a near term peak of 7.04 percent in the January 16 week. Although it slipped lower from there, the rate remains uncomfortably near the 7-percent mark. With consumer confidence weakening in January and February, it could have implications for decisions to buy a home this spring.

Pending home sales are expected down 1.2 percent after a bad 5.5 percent drop in December, not looking good.

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.