Pending home sales dip
Pending home sales slipped in November to their lowest level in nearly a year, according to the National Association of Realtors (NAR), with only the Northeast seeing sales gains in this period.
NAR points to “the brisk upswing in mortgage rates” and ongoing low inventory levels as the reason why some would-be buyers are “dispirited.”
The Pending Home Sales Index (contract signings) declined 2.5 percent from October, and is now 0.4 percent below November 2015, the lowest reading since January.
Rates spiked post-election
Lawrence Yun, NAR chief economist said, “The budget of many prospective buyers last month was dealt an abrupt hit by the quick ascension of rates immediately after the election.” It was good news for the stock market, but discouraged some buyers for the month.
“Already faced with climbing home prices and minimal listings in the affordable price range, fewer home shoppers in most of the country were successfully able to sign a contract,” he added.
Yun indicated prices will continue to rise as supply remains tight. “Some buyers will have to expand the area of their home search or be forced to delay in order to save a little more money for their down payment.”
NAR expects existing home sales to close out the year at a pace of around 5.42 million, dramatically higher than 2015’s pace of 5.25 million. This year marks the highest since 2006 (6.48 million).
In 2017, sales are forecast to grow roughly 2 percent and the national median existing-home price is expected to increase to around 5 percent this year and 4 percent in 2017.
“Much more robust new home construction is needed to relieve inventory shortages and lessen the affordability pressures present throughout the country,” added Yun, repeating his warnings from throughout this year and last.
The Northeast region performed best
Pending home sales in the Northeast rose 0.6 percent, up 5.7 percent above a year ago. In the Midwest, sales fell 2.5 percent which is 2.4 percent lower than November 2015.
The South saw a 1.2 percent decrease, but is 1.3 percent lower than last November. Pending home sales in the West fell 6.7 percent, and is now 1.0 percent below a year ago.