Pending home sales slide in December

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Pending home sales slide in December

By HBSDealer Staff - 01/30/2019
Pending home sales declined in December with all four major regions experienced a decline compared to one year ago, the National Association of Realtors (NAR) reported.

The Pending Home Sales Index (PHSI) fell 2.2% to 99 in December from 101.2 in November while year-over-year contract signings fell 9.8%, marking the 12th-straight month of annual decreases.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

“The stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December,” said Lawrence Yun, NAR chief economist.

Yun also noted that the partial government shutdown has not caused any obvious damage to home sales with 75% of realtors reporting they have not felt any impact from the closure.

“However, if another government shutdown takes place, it will lead to fewer homes sold,” he said.

According to Yun, as the government reopens, more mortgage options will come available for consumers. “Some home transactions were delayed, but we now expect those sales to go forward,” he said.

The PHSI in the Northeast rose 2% to 93.2 in December, and is now 2.5% below a year ago. In the Midwest, the index fell 0.6% to 97.5 in December, 7.2% lower than December 2017.

Pending home sales in the South fell 5% to an index of 109.7 in December and is 13.5% lower than a year ago. The index in the West increased 1.7% in December to 88.4 and fell 10.8% below a year ago.

Denver-Aurora-Lakewood, Colo.; Seattle-Tacoma-Bellevue, Wash.; San Francisco-Oakland-Hayward, Calif.; San Diego-Carlsbad, Calif.; and Portland-Vancouver-Hillsboro, Ore.-Wash.; saw the largest increase in active listings in December compared to a year ago.

Yun said that despite the low home sales in December, he is confident that the housing market will see improvement in 2019.

“The longer-term growth potential is high. The Federal Reserve announced a change in its stance on monetary policy. Rather than four rate hikes, there will likely be only one increase or even no increase at all. This has already spurred a noticeable fall in the 30-year, fixed-rate for mortgages. As a result, the forecast for home transactions has greatly improved, “Yun said.