Pending home sales in November dipped 0.9 percent, which isn’t a dramatic number by any means, but certainly notable as part of a continuing trend. For the third time in four months, pending home sales (contracts signed) slipped, according to the National Association of Realtors (NAR), but why?
Further, the South and Midwest actually saw gains for the month, but the national number was pulled down by the Northeast and West regions.
Sure, the index is 2.7 percent above November 2014, marking the 15th consecutive month of year-over-year gains, and May hit a nine-year high, something is afoot.
So what is going on!?
NAR Chief Economist, Dr. Lawrence Yun points to home price spikes and a cooling economy.
“Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months despite low mortgage rates and solid job gains,” said Dr. Yun.
“While feedback from Realtors® continues to suggest healthy levels of buyer interest, available listings that are move-in ready and in affordable price ranges remain hard to come by for many would-be buyers.”
According to Yun, with existing housing inventory already below year ago levels and new home construction still deficient, it’s likely supply constraints and faster price appreciation will reappear once the spring buying season begins.
“Especially with mortgage rates likely on the rise, affordability issues could creep up enough to temper sales growth – especially to first-time buyers in higher priced markets,” adds Yun.
Regional performances varied widely
Pending home sales in the Northeast decreased 3.0 percent, but remain 4.3 percent above a year ago. In the Midwest the index rose 1.0 percent, and is now 4.1 percent above November 2014.
Conversely, signed contracts rose in the South by 1.3 percent, up 0.5 percent from a year ago. The index in the West declined 5.5 percent in November to 100.4, but remains 4.5 percent above a year ago.
In a statement, NAR stated, “Existing-home sales are forecast to finish 2015 at a pace of around 5.25 million – the highest since 2006, but roughly 25 percent below the prior peak set in 2005 (7.08 million). The national median existing-home price for all of this year will be close to $220,700, up around 6.0 percent from a year ago.”