Due in part to ‘abnormal’ and ‘disruptive’ winter weather, pending home sales dropped 8.7% in December, compared to November, to reach the lowest level since October 2011, the National Association of Realtors (NAR) reports.
Pending home sales fell to 92.4 on NAR's Pending Home Sales Index, down from a downwardly revised 101.2 in November. The data reflect contracts but not closings.
‘Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes or making offers,’ hypothesizes Lawrence Yun, chief economist for NAR, in a release.
Yun notes that home prices have been rising faster than income, which, in turn, is causing some potential buyers to take pause. Meanwhile, a lack of inventory means home shoppers don't have as many choices as they normally would.
‘Although it could take several months for us to get a clearer read on market momentum, job growth and pent-up demand are positive factors," Yun says.
Declines in pending sales were recorded in all four major regions tracked by the report.
In the Northeast, pending home sales dropped 10.3%, compared to November, and were down 5.5% compared to December 2012. In the Midwest, pending home sales declined 6.8%, compared to November, and were 6.9% lower than in December 2012. In the South, they fell 8.8%, compared to November, and were down 6.9% compared to a year ago. In the West, which is most impacted by constrained inventory, they dropped 9.8%, compared to the month prior, and were 16% below a year ago.
NAR forecasts that total existing-home sales will reach 5.1 million this year – essentially the same as 2013 – but inventory remains limited in much of the country. The national median existing-home price is projected to rise about 5.4% in 2014.