Contract Signings Slow Due To Low Supply

The National Association of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes signed each month. It’s considered a good indicator of future home sales, as it measures signings and not closings, which typically happen several weeks later. In December, the index found contract activity down from the month before, falling 3.8 percent from November. Lawrence Yun, NAR’s chief economist, says the decline was likely due to a lack of homes available for sale. “Pending home sales faded toward the end of 2021, as a diminished housing supply offered consumers very few options,” Yun said. But while low inventory continues to be a challenge for buyers, Yun believes relief is on the way. New home construction has been rising for months and, with continued improvement, should add enough inventory to help slow home price increases and offer buyers more options. “The combination of a more measured demand and rising supply will bring housing prices better in line with wage growth,” Yun said. He expects housing starts to reach 1.65 million this year and home prices to rise 5.1 percent. (source)

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