Pending home sales slipped in November, but a reversal is in sight, according to the National Association of REALTORS®’ latest housing report.
NAR’s Pending Home Sales Index—a forward-looking indicator based on contract signings—decreased 0.7 percent to a reading of 101.4 in November. Contract signings are down 7.7 percent year over year.
However, “the latest decline in contract signings implies more short-term pullback in the housing sector and does not yet capture the impact of recent favorable conditions of mortgage rates,” says Lawrence Yun, NAR’s chief economist. Freddie Mac reported another drop in mortgage rates last week. The 30-year fixed-rate mortgage averaged 4.55 percent, with an average 0.5 points.
Yun says that pending contracts have reached their lowest mark since 2014, but he still predicts solid growth over the long term in the housing market.
More inventory is coming to the market as more homeowners put their home up for sale. The markets seeing the largest year-over-year increases in inventories are: Denver-Aurora-Lakewood, Colo.; Seattle-Tacoma-Bellevue, Wash.; San Francisco-Oakland-Hayward, Calif.; San Diego-Carlsbad, Calif.; and Providence-Warwick, R.I.
Overall, the housing industry looks to close out the year with 5.3 million home sales, which is similar to the year 2000. “But given the 17 million more jobs now compared to the turn of the century, the home sales are clearly underperforming today,” Yun says. “That also means there is steady longer-term growth potential.”