WASHINGTON—The number of existing homes that went under contract in the U.S. rose strongly in January, a sign of improvement for the housing market at the start of the year.
An index measuring pending home sales—a gauge of purchases before they become final—rose 4.6% to a seasonally adjusted reading of 103.2 in January, the National Association of Realtors said Wednesday.
Economists surveyed by The Wall Street Journal had predicted a 0.8% increase in January’s sales. The index was down 2.3% in January from a year earlier.
December’s reading was revised slightly lower, to 98.7 from an initial 99.0.
Pending sales offer a forecast of the housing market because they measure purchases at the time a contract is signed rather than at closing. Contracts typically take weeks to become final, and some are ultimately canceled.
“A change in Federal Reserve policy and the reopening of the government were very beneficial to the market,” said Lawrence Yun, the trade group’s chief economist.
He added that rising incomes, a strong labor market and steady mortgage rates should help January’s positive trend to continue.
Still, the NAR reported earlier this month that its more closely watched index—final sales of existing homes, which measure purchases after closing—fell in January.
News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.