Dive Brief:

• Pending home sales dropped 2.5% in January to a rate of 106.0, from an upwardly revised rate of 108.7 in December, the National Association of Realtors reported Thursday.
• January's rate was 1.4% higher than January 2015. The results failed to meet expectations, as eonomists surveyed by The Wall Street Journal forecast a 0.5% bump in January pending home sales.
• The South was the only region to post sales gains in January, with a slight 0.3% rise. Pending sales declined in the Midwest by 4.9%, in the West by 4.5%, and in the Northeast by 3.2%.

Dive Insight:

NAR Chief Economist Lawrence Yun said January's decline was likely due to a winter storm in the Northeast, home price growth, and a lack of housing inventory. Rising prices and limited housing supply have continued to be the main factors cited as holding back stronger growth in the residential sector.

Regarding first-time buyers, Yun said in a release, "Without a much-needed boost in new and existing-homes for sale in their price range, their path to homeownership will remain an uphill climb."

The residential industry views pending sales as a sign of completed sales to come in the next one or two months. The Wall Street Journal noted the January slip demonstrated that "swiftly rising prices and lower inventory muted buyer demand after the strongest year in nearly a decade."

Housing market reports for this month have been mostly disappointing. Homebuilder confidence slipped three points to a score of 58, housing starts unexpectedly slipped 3.8%, and new home sales dropped 9.2% in January. On the bright side, however, existing home sales surpassed expectations and rose a slight 0.4% last month.