Housing contract activity sinks to all-time low in January amid high rates, cold weather

A measure of home contract signings dropped to its lowest level on record in January as buyers were stymied by cold weather and unaffordable prices.

The National Association of Realtors’ Pending Home Sales Index dropped 4.6% in January from a month earlier, reaching an all-time low of 70.6. A level of 100 is equal to housing contract activity in 2001. An earlier cyclical low of 70.2 seen in July 2024 was later revised higher.

Compared with a year earlier, contract activity declined 5.2%.

Pending sales fell month-over-month in all regions of the country except for the Northeast, which saw a 0.3% gain from December. The decline was steepest in the South, where activity sunk 9.2% from a month earlier.

Compared to a year earlier, activity was down in all regions of the country. The Northeast had the smallest contraction, dropping 0.5% from January 2024, and the South had the largest with an 8.8% decline.

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Cold weather, limited inventory, and a desire to avoid disrupting children in the middle of the school year typically make January among the slowest periods for home buying each year.

This year, higher mortgage rates also likely kept buyers away, Lawrence Yun, the NAR’s chief economist, said in a statement. Particularly cold temperatures in much of the country may have played a role too.

“It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months,” Yun said in a statement. “However, it’s evident that elevated home prices and higher mortgage rates strained affordability.”

Mortgage rates were stuck in the 6.9% to 7% range for all of January. At those rates, the buyer of a $300,000 home would have a monthly mortgage payment of $1,590, about $50 higher than a year earlier.

Homes typically go under contract a month or two before closing, making pending home sales an early indicator of upcoming housing market activity.

Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance.