The National Association of Realtors (NAR) Wednesday morning released its data on pending sales of existing homes for the month of December. The pending home sales index rose 0.5%, from an upwardly revised November reading of 109.6, to 110.1.
November sales rose in two of four NAR geographical regions.
The consensus estimate called for a month-over-month increase of 0.4% 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 39 straight months.
The NAR’s chief economist, Lawrence Yun, noted:
Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018. Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now.
Sadly, these positive indicators may not lead to a stronger sales pace. Buyers throughout the country continue to be hamstrung by record low supply levels that are pushing up prices — especially at the lower end of the market. However, there’s no doubt the nation’s most expensive markets with high property taxes are going to be adversely impacted by the tax law.
Just how severe is still uncertain, but with homeownership now less incentivized in the tax code, sellers in the upper end of the market may have to adjust their price expectations if they want to trade down or move to less expensive areas. This could in turn lead to both a decrease in sales and home values.
By region, December pending home sales fell by 5.1% to an index score of 93.9 in the Northeast, down 2.7% compared with December 2016. In the Midwest, sales dipped 0.3% to an index score of 105, up 0.3% compared to last year’s index.
Sales rose by 1.5% in the West to a score of 101.7 and remain down 3.1% year over year for the month. Sales in the South rose 2.6% to 126.9 in December and are now 4% above the year-ago index score.
The NAR’s Yun said existing-home sales closed 2017 at around 5.51 million. He expects an increase of 1.1% this year to around 5.54 million. The national median existing-home price in 2017 is expected to rise by about 6%. In 2016, existing sales increased 3.8% and prices rose 5.1%. Last month Yun said he expected 2018 price growth to moderate to around 2%.