NAR: Dec.’s pending home sales a bit higher
WASHINGTON – Jan. 28, 2016 – U.S. pending home sales inched marginally higher in December, fueled by a large increase in the Northeast that outpaced declines in the other three major regions, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index, a forward-looking indicator based on contract signings, crawled 0.1 percent higher to 106.8 in December from a downwardly revised 106.7 in November. The index is also 4.2 percent higher year-to-year (December 2014, 102.5) and has increased year-over-year for 16 consecutive months.
Lawrence Yun, NAR chief economist, says contract activity closed out the year on stable footing but lost some momentum in areas outside the Northeast.
"Warmer than average weather and more favorable inventory conditions compared to other parts of the country encouraged more households in the Northeast to make the decision to buy last month," Yun says. "Overall, while sustained job creation is spurring more activity compared to a year ago, the ability to find available homes in affordable price ranges is difficult for buyers in many job-creating areas. With homebuilding still grossly inadequate, steady price appreciation and tight supply conditions aren't going away any time soon."
According to Yun, healthy labor market conditions will persuade more households to buy, but overall demand may be somewhat curtailed in coming months. The stock market's sizeable losses since the start of the year and the effect slowing manufacturing activity is having in some areas – especially cities with a lot of energy sector jobs – could cause some to hold off on buying.
"The silver lining from the market turmoil in recent weeks is the fact that mortgage rates have slightly declined," says Yun. "Buyers looking to close on a home before the spring buying season begins may be rewarded with a mortgage rate at or below 4 percent."
NAR forecasts existing-homes sales this year to be around 5.34 million, an increase of 1.5 percent from 2015. The national median existing-home price for all of this year is expected to increase between 4 and 5 percent. In 2015, existing-home sales increased 6.5 percent and prices rose 6.8 percent.
Rents – which have far outpaced wages in recent years – are expected to slightly slow to 3.3 percent growth in 2016 from 3.6 percent a year ago. Multifamily housing starts are expected to reach 420,000 units this year, the highest level since 1987.
Pending sales by sector
Pending sales in the Northeast increased 6.1 percent to 97.8 in December. The index is now 15.3 percent above a year ago. In the Midwest, the index decreased 1.1 percent to 103.6 in December, but it's still 3.6 percent above December 2014.
Pending home sales in the South declined 0.5 percent to an index of 119.3 in December but it's 1.0 percent higher than last December. The index in the West decreased 2.1 percent in December to 97.5, but it remains 3.4 percent above a year ago.© 2016 Florida Realtors®