For the twelfth consecutive month, pending home sales (contracts signed on homes for sale) fell annually, dipping 9.8 percent in December compared to the previous December, according to the National Association of Realtors (NAR).
Down 2.2 percent from the previous month, NAR reports that pending home sales fell most dramatically in the South by 5.0 percent (down 13.5 percent annually), and 0.6 percent in the Midwest (down 7.2 percent from last December).
Meanwhile, pending home sales actually rose for the month in the Northeast (up 2.0 percent) and the West (up 1.7 percent), despite coming in lower than December 2017 (down 2.5 percent, and 10.8 percent, respectively).
Dr. Lawrence Yun, NAR Chief Economist, points to Wall Street and Main Street as factors in the decline.
“The stock market correction hurt consumer confidence,” said Dr. Yun, adding, “record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December.”
Dr. Yun indicates that the partial government shutdown has not caused obvious damage to home sales, and that as the government reopens fully, more mortgage options will become available for consumers.
“Some home transactions were delayed,” he notes, “but we now expect those sales to go forward.”
Despite a setback in December, Dr. Yun stands by his previous forecast, asserting that the housing sector will see improvement in 2019.
“The longer-term growth potential is high,” he observes, adding that he expects the Federal Reserve to reduce their projected rate increases to one or even zero (from four as previously expected), decreasing mortgage rates and improving the 2019 forecast.
