Pending Home Sales Archives

Pending Home Sales Fall 2.2% In November

The National Association of Realtors’ Pending Home Sales Index tracks the number of contracts to buy homes that are signed each month. Because it tracks contract signings, not closings, it can be a good indicator of future home sales. In November, the index found pending sales down 2.2 percent from the month before. Lawrence Yun, NAR’s chief economist, says home buying conditions are challenging right now but relief may be on the way. “There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices,” Yun said. “While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability.” Regionally, contract signings were mostly flat except for in the Midwest, where they fell 6.3 percent. The West also saw a decline, with contract activity down 2.2 percent month over month.

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Home Buyer Demand Hits Post-Recession High

Though this year’s real estate market may not look as buyer friendly as it has in recent years, demand is at its highest level since the Great Recession, according to the National Association of Realtors’ chief economist, Lawrence Yun. Yun says Americans are feeling more confident about their financial status due to better job prospects and recent stock market gains. That, of course, is positive news. But the flip side of increasing buyer demand is more competition for available homes at a time when for-sale inventory is lower than normal in many markets. “Buyer traffic is easily outpacing seller traffic in several metro areas and is why homes are selling at a much faster rate than a year ago,” Yun says. “Most notably in the West, it’s not uncommon to see a home come off the market within a month.” So what does this mean for the spring season? Well, if you’re a prospective buyer, it means you should be ready to move quickly when you find a house you’re interested in. It also means you should be on the lookout for rising prices. Where there are more home buyers than available houses, price increases will accelerate. Yun warns that, especially in expensive markets, “prospective buyers will feel this squeeze in their budget and will likely have to come up with additional savings or compromise on home size or location.” More here.

Pending Home Sales Rise In December

When a buyer signs a contract to purchase a home, it is referred to as a pending sale because it usually takes a few weeks before the transaction closes and the house is considered officially sold. Since most of these transactions end in a sold house, the National Association of Realtors tracks them as a way of predicting the number of final sales that will be seen in coming months. In December, the NAR found pending sales up 1.6 percent from the month before. Lawrence Yun, NAR’s chief economist, says the year ended on a high note. “Pending sales rebounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract,” Yun said. “The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs.” Yun also points out that home sales figures vary depending on the price of the house. For example, sales of homes above $250,000 were up 10 percent over the year before in December. By comparison, sales of homes under $100,000 fell 11.6 percent. This indicates that there are more homes for sale at the higher end of the market than there are at more affordable levels. However, an expected increase in the number of new homes built this year could help balance the market, offering buyers more choices and helping to moderate future price increases on existing homes.

Pending Home Sales Down In November

When an offer is accepted on a house, the closing process begins. During this time, the sale of that home is considered pending because it is under contract but not yet sold. The National Association of Realtors’ Pending Home Sales Index tracks these transactions because they are a good indicator of future sales of existing homes. In November, the index fell 2.5 percent from the month before. Lawrence Yun, NAR’s chief economist, says low inventory and higher rates affected sales during the month. “The budget of many prospective buyers last month was dealt an abrupt hit by the quick ascension of rates immediately after the election,” Yun said. “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.” So what does this mean for affordability conditions in 2017? Well, according to Yun, the effects of increasing mortgage rates should be subdued a bit by growing wages and a healthy job market. The more Americans feel secure with their jobs and income, the more likely they’ll be to enter the market regardless of interest rate increases. More new home construction could also help relieve affordability pressure by adding for-sale inventory to markets where there are more buyers than available homes, which would help slow price increases. More here.