Pending home sales see an “uneven uptrend”
After rising to a 2.5 year high in November, pending home sales (contracts signed) fell nationally by 4.3 percent in December, according to the National Association of Realtors. The trade group is quick to point out that pending home sales have stayed above year-ago levels for 20 consecutive months and were 6.9 percent higher in December compared to December of 2011.
Dr. Lawrence Yun , NAR chief economist, said there is an uneven uptrend. “The supply limitation appears to be the main factor holding back contract signings in the past month.” he said. “Buyer interest remains solid, as evidenced by a separate Realtor® survey which shows that buyer foot traffic is easily outpacing seller traffic.”
“Supplies of homes costing less than $100,000 are tight in much of the country, especially in the West, so first-time buyers have fewer options,” Dr. Yun added “We expect a seasonal rise of inventory in the spring to help, but a seller’s market may be developing. Much of the West is already a seller’s market for homes priced under a million dollars, but conditions are much more balanced in the Northeast.”
Pent up demand and favorable affordability
The PHSI in the Northeast fell 5.4 percent to 78.8 in December but is 8.4 percent higher than December 2011. In the Midwest the index rose 0.9 percent to 104.8 in December and is 14.4 percent above a year ago. Pending home sales in the South declined 4.5 percent to an index of 111.5 in December but are 10.1 percent higher December 2011. In the West the index fell 8.2 percent in December to 101.0 and is 5.3 percent below a year ago.
The NAR forecasts existing home sales will increase 9.0 percent in 2013 after already rising 9.0 percent in 2012, as they point to tight inventory levels, favorable affordability conditions, and pent up demand as reasons for an optimistic forecast. For most of 2012, the trade group was quite cautious in their optimism, and although this month’s data was negative, the last 60 days have been the first signs of a tone shift from slightly cynical to slightly hopeful.