A forward-looking gauge of U.S. home purchases rose in January to its highest level in nearly a year and a half, a sign of firming demand in the housing market.
The National Association of Realtors said Friday that its pending home sales index, which is based on contract signings for purchases of existing homes, increased 1.7% to a seasonally adjusted level of 104.2 in January from an upwardly revised reading of 102.5 in December.
Economists surveyed by The Wall Street Journal had expected pending home sales would rise 2% last month after dipping in December. Home sales typically close within a couple months after signing.
"Through the volatility, the trend in home sales is up probably up modestly at least," High Frequency Economics chief U.S. economist Jim O'Sullivan said in a note to clients.
The index rose 8.4% in January from a year earlier and reached its highest level since August 2013 , when home sales were tumbling after a jump in mortgage rates.
Lawrence Yun , NAR's chief economist, said sales look healthier despite tight inventory that is sending prices higher, a trend that could deter some would-be home buyers.
"All indications point to modest sales gains as we head into the spring buying season," Mr. Yun said.
News Corp , owner of The Wall Street Journal , also owns Move Inc. , which operates a website and mobile products for the National Association of Realtors .
The U.S. housing market entered 2015 on uncertain footing after a generally lackluster 2014.
Sales of previously owned homes, which make up about 90% of the U.S. market, fell roughly 3% in 2014 from the prior year. In January, existing-home sales declined 4.9% from the prior month to their slowest pace since last spring, the NAR said Monday.
Sales of newly built single-family homes ticked down 0.2% in January from the prior month but remained near their fastest pace since mid-2008, the Commerce Department said Wednesday. In 2014, new-home sales rose about 2% from the prior year.
Home-building activity dipped in January. Housing starts fell a seasonally adjusted 2% from the prior month, and single-family housing starts declined 6.7% from December, according to Commerce Department data.
Still, starts rose 18.7% in January from a year earlier, reflecting a 16.3% increase in construction of single- family homes and even stronger growth for multifamily structures like apartment buildings.
Mortgage rates remain low but have ticked up in recent weeks. The average interest rate on a 30-year fixed-rate mortgage was 3.80%, Freddie Mac said Thursday, up from 3.67% last month but down from 4.30% in February 2014 .
According to Friday's report, pending sales of existing homes rose 3.2% in the South last month from December, and climbed 2.2% in the West. Pending sales ticked up 0.1% in the Northeast and fell 0.7% in the Midwest.
The National Association of Realtors on Friday also released seasonal-adjustment revisions for pending home sales data from 2012 through 2014, and revised data for the West region going back to 2001. "Most revisions are minor with no impact on previous characterizations of the overall market based on the headline seasonally adjusted index," the trade group said in a statement.
