The index of pending home resales dropped 2.8 percent, after a revised 3.2 percent decrease the prior month, to 88.9 based on contracts signed in January from a downwardly revised 91.5 in December, data from The National Association of Realtors [NAR] showed on Monday. That is the second straight monthly decline and the slowest pace since October.
“While home buyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes that need to go through the system,” said NAR chief economist Lawrence Yun. “We should not expect the recovery to be in a straight upward path – it will zig-zag at times.”
The pace of January existing-home sales, 5.36 million, is slightly higher than NAR’s annual forecast for 2011. If the number of Americans signing contracts to buy previously owned homes stays at these levels, there should be an 8% increase in total existing-home sales this year.