However, contract signings were up 4.6% compared with December 2018.
Regionally, and month-over-month, pending home sales fell 5.5% in the South, 5.4% in the West, 4.0% in the Northeast and 3.6% in the Midwest.
However, pending home sales were up in three of the four regions – the South (up 7.4%), the West (up 7.0%) and the Midwest (up 1.3%). In the Northeast, contract signings were down 0.1% compared with a year ago.
Despite the drop in December, pending home sales are expected to rebound in January, due mainly to low mortgage rates.
“Mortgage rates are expected to hold under four percent for most of 2020, while net job creation will likely exceed two million,” says Lawrence Yun, chief economist for NAR, in a statement.
However, inventory remains a significant concern.
“Due to the shortage of affordable homes, home sales growth will only rise by around three percent,” Yun says. “Still, national median home price growth is in no danger of falling due to inventory shortages and will rise by four percent. The new home construction market also looks brighter, with housing starts and new home sales set to rise six percent and 10 percent, respectively.”
Pointing to data from active listings at realtor.com, Yun says the markets where listing prices are around $250,000 – an affordable price point in most markets nationally – are drawing some of the most significant buyer attention, including Fort Wayne, Ind., Burlington, N.C., Topeka, Kan., Pueblo, Colo., and Columbus, Ohio.
“The state of housing in 2020 will depend on whether home builders bring more affordable homes to the market,” Yun says. “Home prices and even rents are increasing too rapidly, and more inventory would help correct the problem and slow price gains.”