NAR: Nov.’s Pending Home Sales Slide 2.6%
It’s the third consecutive month-to-month declines for signed contracts, but in a year-to-year comparison, they were up 16.4% – and every division was up double digits.
WASHINGTON – November pending home sales declined month-to-month, according to the National Association of Realtors® (NAR). However, compared to a year ago, all four areas achieved gains in pending home sales transactions.
The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – fell 2.6% to 125.7 in November, the third straight month of decline, but year-over-year contract signings climbed 16.4%.
“The latest monthly decline is largely due to the shortage of inventory and fast-rising home prices,” says Lawrence Yun, NAR’s chief economist. “It’s important to keep in mind that the current sales and prices are far stronger than a year ago.”
Yun predicts a favorable outlook for the 2021 housing market. According to his 2021 projections, there will be a slight upward rise in mortgage rates to around 3% from the current 2.7% rate. Existing-home sales are expected to increase roughly 10% and new home sales by 20% next year.
“The market is incredibly swift this winter with the listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates,” Yun adds. “Economic growth is guaranteed from the stimulus package and from vaccine distribution, but high government borrowing will put modest upward pressure on interest rates.”
November pending home sales regional breakdown: The Northeast PHSI slid 3.3% to 108.6 in November, a 15.3% increase from a year ago. In the Midwest, the index fell 3.1% to 115.9 last month, up 14.1% from November 2019.
Pending home sales in the South decreased 1.1% to an index of 150.0 in November, up 21.3% from November 2019. The index in the West fell 4.7% in November to 111.3, which is up 10.4% from a year ago.
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