US pending home sales in January hit record low amid high rates

Robert Besser
04 Mar 2025, 20:37 GMT+10

Contracts to buy previously owned homes in the U.S. fell to a record low in January due to high mortgage rates and rising home prices, making it harder for buyers to afford homes
The National Association of Realtors (NAR) reported that its Pending Home Sales Index, which tracks signed contracts, dropped 4.6 percent in January to 70.6, the lowest level ever recorded
Economists had expected a smaller decline of 1.3 percent. Compared to last year, pending home sales were down 5.2 percent

WASHINGTON, D.C.: Contracts to buy previously owned homes in the U.S. fell to a record low in January due to high mortgage rates and rising home prices, making it harder for buyers to afford homes.

The National Association of Realtors (NAR) reported that its Pending Home Sales Index, which tracks signed contracts, dropped 4.6 percent in January to 70.6, the lowest level ever recorded. Economists had expected a smaller decline of 1.3 percent. Compared to last year, pending home sales were down 5.2 percent.

Lawrence Yun, NAR's chief economist, noted that severe winter weather might have contributed to the drop, but the main issue was high home prices and mortgage rates, which reduced affordability. Contracts fell in the Midwest, South, and West but rose slightly in the Northeast.

According to the Federal Housing Finance Agency, home prices increased by 4.7 percent over the past year. Mortgage rates, which averaged around seven percent in January, have now dropped slightly to 6.85 percent, based on data from Freddie Mac.

Despite the Federal Reserve cutting interest rates by 100 basis points since September, mortgage rates have remained high. The Fed paused further cuts in January to evaluate the impact of the Trump administration's economic policies, including tariffs, tax cuts, and mass deportations, which some economists fear could drive inflation.

Mortgage rates typically follow the 10-year Treasury yield, which has declined slightly due to weaker economic data. However, concerns over inflation, mainly due to tariffs potentially increasing prices, may limit further declines.