Pending Home Sales Dipped In November

Pending home sales dipped 2.5% in November to a score of 107.3 on the National Association of Realtors’ (NAR) Pending Home Sales Index.

That’s down from a score of 110.0 in October and the lowest score since January (105.4).

What’s more, it’s down 0.4% compared with a score of 107.7 in November 2015.

The culprit? Well, November is traditionally not a strong month for contract signings, but Lawrence Yun, chief economist for NAR, says ongoing supply shortages and the recent surge in mortgage rates had their effect.

“The budget of many prospective buyers last month was dealt an abrupt hit by the quick ascension of rates immediately after the election,” Yun says in a release. “Already faced with climbing home prices and minimal listings in the affordable price range, fewer home shoppers in most of the country were successfully able to sign a contract.”

Looking on the positive side, Yun says stronger wage growth in 2017 could help offset the impact of rising rates on home affordability.

“Healthy local job markets amidst tight supply means many areas will remain competitive with prices on the rise,” he says. “Those rushing to lock in a rate before they advance even higher will probably have few listings to choose from. Some buyers will have to expand the area of their home search or be forced to delay in order to save a little more money for their down payment.”

NAR is currently forecasting that existing-home sales will close out this year at a pace of around 5.42 million.

Not only does this surpass the rate of 5.25 million seen in 2015, but it is also the highest rate since 2006 (6.48 million).

For 2017, NAR is forecasting that existing-home sales will increase about 2% to an annual pace of around 5.52 million.

The median existing-home price is expected to increase by about 5% this year and by about 4% in 2017.

“Much more robust new home construction is needed to relieve inventory shortages and lessen the affordability pressures present throughout the country,” adds Yun.

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