US January pending home sales +8.1% vs +1.0% expected | Forexlive

• Prior was +2.5% (revised to +1.1%)
• Index 82.5 vs 76.9 prior (revised to 76.3)

There was a tentative improvement in January but with mortgage rates running higher again, that’s on borrowed time. This month’s number is impressive and validates the anecdotal reports of buyer interesting January but now that rates are back near the highest since the financial crisis, that’s likely to cool off.

My takeaway from the surge in January interest in housing is that there is a huge wave of pent up demand that’s waiting for lower rates to be unleashed. I don’t know if that happens in 2023 or 2024 but at some point rates will come down and buyers will flood the market. The longer it takes, the more pent up demand there will be. Home builders are also scaling back this year so that will tighten the market further.

/US dollar