Pending home sales slip in November
The Pending Home Sales Index drops year-over-year in all four major regions.
Pending home sales declined in November with all four major U.S. regions seeing a decrease year-over-year.
The Pending Home Sales Index, indicator based on contract signings, decreased 0.7% to 101.4 in November from 102.1 in October, according to the National Association of Realtors. But year-over-year contract signings took a bigger plunge, dropping 7.7%. The latter marks the 11th straight month of annual decreases
“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,” said Lawrence Yun, chief economist of the NAR.
But Yun also noted that while pending contracts have reached their lowest mark since 2014, there is no reason to be overly concerned, and he predicts solid growth potential for the long-term.
All four major regions sustained a drop when compared to one year ago, with the West having the largest decrease. “
Yun suggests that affordability challenges in the West are part of the blame for the drop in sales. Home prices in the West region have risen too much, too fast, according to Yun. “Land cost is expensive, and zoning regulations are too stringent. Therefore, local officials should consider ways to boost local supply; if not, they risk seeing population migrating to neighboring states and away from the West Coast.”
The PHSI increased 2.8% in November while falling 12.2% below a year ago.
In the Northeast, the PHSI rose 2.7% to 95.1 in November but is 3.5% percent below a year ago. In the Midwest, the index fell 2.3% to 98.1 in November and is 7% lower than November 2017.
Pending home sales in the South fell 2.7% to an index of 115.7 in November, which is 7.4% lower than a year ago.
Yun also indicated that the latest government shutdown will harm the housing market.
“Unlike past government shutdowns, with this present closure, flood insurance is not available. That means that roughly 40,000 homes per month may go unsold because purchasing a home requires flood insurance in those affected areas,” Yun said. “The longer the shutdown means fewer homes sold and slower economic growth.
Seattle-Tacoma-Bellevue, Wash., San Francisco-Oakland-Hayward, Calif., San Diego-Carlsbad, Calif., and Providence-Warwick, Rhode Island saw the largest increase in active listings in November compared to a year ago.
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