The National Association of Realtors (NAR) Wednesday morning released its data on pending sales of existing homes for the month of November. The pending home sales index inched up 0.2% from an October reading of 109.3. The index is now at its highest reading since June and 0.8% above last year’s November reading.
November sales rose in two of four NAR geographical regions.
The consensus estimate called for a month-over-month increase of 0.5% in pending sales. The index reflects signed contracts, not sales closings. An index reading of 100 equals the average level of contract signings during 2001.
The index has been above 100 (the “average” reading) for 38 straight months.
The NAR’s chief economist, Lawrence Yun, noted:
The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear. However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust. Realtors® say many would-be buyers from earlier this year, stifled by tight supply and higher prices, are still trying to buy a home.
The strengthening economy, and expectation that more millennials will want to buy, serve as promising signs for solid homebuying demand next year, while also putting additional pressure on inventory levels and affordability. Sales do have room for growth in most areas, but nationally, overall activity could be slightly negative. Markets with high home prices and property taxes will likely feel some impact from the reduced tax benefits of owning a home.
By region, November pending home sales jumped by 4.1% to an index score of 98.9 in the Northeast, up 1.1% compared with November 2016. In the South, sales dipped 0.4% to an index score of 123.1, up 2.5% compared to last year’s index.
Sales declined by 1.8% in the West to an index score of 100.4 and remain down 2.3% year over year for the month. Midwest sales rose 0.4% to 105.8 in November and are now 0.8% above the year-ago index score.
The NAR’s Yun forecasts existing-home sales to end the year at around 5.54 million, an increase of 1.7% from 2016’s total of 5.45 million. The national median existing-home price this year is expected to rise by about 6%. In 2016, existing sales increased 3.8% and prices rose 5.1%.
For 2018, Yun anticipates essentially no change (a decline of 0.4%) in existing sales (5.52 million) and price growth to moderate to around 2%.