US pending home sales jump past forecasts in January

Pending home sales in the US jumped at the start of 2023 thanks to the drop in mortgage rates around the turn of the year.

The National Association of Realtors' Pending Home Sales index rose at a month-on-month pace of 8.1% in January (consensus: 0.9%), although in year-on-year terms they were down by 24.1%.

"Buyers responded to better affordability from falling mortgage rates in December and January,” said NAR Chief Economist Lawrence Yun.

According to Yun, the US economy would continue to create jobs over the course of 2023 and 2024 and the 30-year fixed mortgage rate would decline to an average of 6.1% in 2023 and 5.4% in 2024.

Despite the improved rates environment and job gains, Yun forecast that annual existing-home sales would decline by 11.1% in 2023 to reach 4.47m units, before rebounding by 17.7% in 2024.

New home sales meanwhile were seen slipping by 3.7% in 2023 and jumping by 19.4% in 2024.