Of four regions studied, only Midwest pending sales dropped, but it was enough to impact the entire index. Year-to-year, pending sales were up by double-digits (21%).
WASHINGTON – In December, pending home sales slipped 0.3% month-to-money, the fourth consecutive month of decline after an unseasonal surge in August. Pending sales only fell in one of the four regions tracked – the Midwest at 3.6% – but it was enough to weigh down the broader index.
Despite the drop, however, the National Association of Realtors® (NAR) says it was the highest ever recorded in a December.
It’s the fourth consecutive month-over-month decline, but in a year-to-year comparison, the index and all four regions saw double-digit pending-sale increases.
The Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, waned 0.3% to 125.5 in December; year-over-year, contract signings jumped 21.4%. An index of 100 is equal to the level of contract activity in 2001.
“Pending home sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale,” says Lawrence Yun, NAR’s chief economist. “There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings.”
Yun says high buyer demand “without a significant boost in supply has caused home prices to increase, and we can expect further upward pressure on prices for the foreseeable future.”
Yun continues to project that 2021 will bring about strong economic growth, supported by low mortgage rates and fiscal stimulus, which in turn will bolster existing-home sales. With rates expected to remain low, existing-homes sales are likely to reach 6.49 million in 2021 – a 15% increase from 5.64 million in 2020.
“There will also be slower home price appreciation, likely 6.6%, as increased confidence from homebuilders will ultimately lead to an increase in housing starts,” Yun adds.
December regional breakdown: The Northeast PHSI rose 3.1% to 112.0 in December, a 22.1% increase from a year ago. In the Midwest, the index fell 3.6% to 111.7 last month, but it’s up 13.9% from December 2019.
Pending home sales in the South increased 0.1% to an index of 150.6 in December, up 26.6% year-to-year. And the index in the West was unchanged in December at 111.3, though it’s up 18.9% year-to-year.
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