The National Association of Realtors (NAR) seasonally adjusted pending home sales index declined. The quote of the day from this NAR 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. …
Analyst Opinion of Pending Home Sales
The unadjusted data shows the rate of year-over-year growth improved this month – but the rolling averages declined so I would more or less agree with he headline view. One should expect a significant decline in home sales in December as many home sales were expedited to close in November to beat the interest rate rise.
Pending home sales are based on contract signings, and existing home sales are based on the execution of the contract (contract closing).
The NAR reported:
- Pending home sales index was down 2.5 % month-over-month and down 0.4 % year-over-year.
- The market was expecting month-over-month growth of 0.3 % to 2.0 % (consensus +0.5 %) versus the contraction of 2.5 % reported.
Econintersect‘s evaluation using unadjusted data:
- the index growth rate was accelerated 1.2 % month-over-month and up 1.4 % year-over-year.
- The current trends (using 3 month rolling averages) are slightly decelerating..
- Extrapolating the pending home sales unadjusted data to project December 2016 existing home sales would be a 3.5 % contraction year-over-year for existing home sales.
Unadjusted 3 Month Rolling Average of Year-over-Year Growth for Pending Home Sales (blue line) and Existing Home Sales (red line)
z pending2.png
From Lawrence Yun , NAR chief economist:
…. ongoing supply shortages and the surge in mortgage rates took a small bite out of pending sales in November. The budget of many prospective buyers last month was dealt an abrupt hit by the quick ascension of rates immediately after the election. 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. ….
Healthy local job markets amidst tight supply means many areas will remain competitive with prices on the rise. Those rushing to lock in a rate before they advance even higher will probably have few listings to choose from,” said Yun. “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.
Much more robust new home construction is needed to relieve inventory shortages and lessen the affordability pressures present throughout the country.
