Pending home sales increased 0.2% in November compared with October to reach a score of 109.5 on the National Association of Realtors (NAR) Pending Home Sales Index.
That’s up ever so slightly from a score of 109.3 in October.
Compared with November 2016, pending home sales were up 0.8%.
Regionally, pending home sales jumped 4.1%, month over month, in the Northeast and increased 0.4% in the Midwest. Pending sales decreased 0.4% in the South and fell 1.8% in the West.
NAR is forecasting that existing-home sales and price growth will slow in 2018, primarily because of the altered tax benefits of homeownership affecting some high-cost areas.
“The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear,” says Lawrence Yun, chief economist for NAR, in a statement. “However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust. Realtors say many would-be buyers from earlier this year, stifled by tight supply and higher prices, are still trying to buy a home.”
One of the biggest questions heading into 2018, according to Yun, is if the depressed levels of available supply can improve enough to slow price growth and make buying a home more affordable.
Although last month’s significant boost in existing sales was noteworthy, it did come with some concerns. Sales prices were up 5.8% – more than double wage growth – and the 3.4-month supply of homes on the market was the lowest since NAR began tracking in 1999.
“The strengthening economy, and expectation that more millennials will want to buy, serve as promising signs for solid homebuying demand next year, while also putting additional pressure on inventory levels and affordability,” Yun says. “Sales do have room for growth in most areas, but nationally, overall activity could be slightly negative. Markets with high home prices and property taxes will likely feel some impact from the reduced tax benefits of owning a home.”
Yun forecasts that existing-home sales will finish 2017 at an annual pace of about 5.54 million, an increase of 1.7% compared with about 5.45 million in 2016.
He forecasts that existing-home sales will reach an annual pace of about 5.52 million in 2018, a decrease of 0.4% compared with 2017.
Home prices are forecast to increase 6% in 2017, according to NAR’s estimates.
However, home price growth in 2018 is forecast to increase by only about 2%.