With higher mortgage rates and home prices squeezing affordability, a key indicator of the housing market’s near-term health signals more sector struggles, the National Association of Realtors said.

The pending home sales index hit an all-time low nationally in January and has fallen sharply in a region that includes Maryland.

Pending sales, when contracts are signed but not yet closed, dipped 4.6% in January in the United States, the Realtors group reported on Feb. 27. The decrease pushed an index of pending sales to 70.6, an all-time low for the indicator. An index of 100 is equal to the level of contract activity in 2001. Pending deals fell even more compared with January 2024, by 5.2%, NAR said.

“It’s evident that elevated home prices and higher mortgage rates strained affordability,” Lawrence Yun, NAR chief economist, said in a statement. But even a slight reduction in mortgage rates could spur greater buyer interest, he said.

Mortgage rates in January ranged from 6.91% to 7.04%, meaning a mortgage payment on a $300,000 home rose $50 a month, to $1,590, compared with January a year earlier, NAR said.

In Maryland, home prices have risen, climbing 7.1% to an average of $480,542 in January, according to the most recent statistics reported by Bright MLS. The Baltimore-area jurisdictions with the biggest average home price increases in January were Howard County, up $13.3%, to $650,155; Baltimore County, up 12.8% to $426,062; and Baltimore City, up nearly 12% to $239,983.

Prices are up as both active inventory and the number of new listings in Maryland were lower in January than a year earlier.

But home sales in the state edged up 2.1% compared with January 2024, Bright MLS said, and market conditions have been typical for the first month of the year, said Cheryl Abrams Davis, president of Maryland Realtors.

Pending sales have been declining each January since 2023 in Maryland, which is facing a housing shortage, Abrams Davis said. Some homeowners may be hesitant to put their homes on the market because they had locked in historically low mortgage rates years ago.

The number of pending contracts in Maryland fell to 4,637 in January from 4,765 in January 2024, Bright MLS statistics show.

“But as peoples’ circumstances and situations change, some are coming back and putting their houses on the market,” and planning to take advantage of the typically more robust spring market, Abrams Davis said. “We will see an uptick in listings.”

By U.S. region, the South, which includes Maryland, experienced the greatest falloff in contract signings in January, both month-over-month and compared with a year earlier, the NAR national report said. The index for the South plunged 9.2% to 81 in January, the report said.

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