Pending home sales fell 2.6% in November compared with October to a score of 125.7 on the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI).
However, contract signings were up 16.4% compared with October 2019.
Regionally, and month over month, pending home sales decreased 4.7% in the West, 3.3% in the Northeast, 3.1% in the Midwest and 1.1% in the South.
Year-over-year, pending home sales were up 21.3% in the South, 15.3% in the Northeast, 14.1% in the Midwest and 10.4% in the West.
“The latest monthly decline is largely due to the shortage of inventory and fast-rising home prices,” explains Lawrence Yun, chief economist for NAR, in the monthly report. “It is important to keep in mind that the current sales and prices are far stronger than a year ago.”
“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 says.
Yun predicts interest rates will rise in 2021 to an average of around 3% compared with the current 2.7%.
Existing-home sales are expected to increase roughly 10% and new home sales by 20% next year.
“Economic growth is guaranteed from the stimulus package and from vaccine distribution, but high government borrowing will put modest upward pressure on interest rates,” Yun says.
