The latest Pending Home Sales Index from the National Association of Realtors (NAR) showed a slight increase from that of the year prior, rising 1.8 percent. Additionally the index indicated that pending sales grew 0.1 percent from September 2016.
In combination with the latest Existing Home Sales and Builder Confidence reports, Stephen Melman, Director of Economic Services at the National Association of Home Builders, says, “These reports are good news for new residential construction as the housing recovery continues to address demand among first-time buyers and broadens across a wider range of markets during the balance of 2016 and into 2017.”
In the Pending Home Sales report, Lawrence Yun, NAR Chief Economist, states that homebuyers in October appear to have worked quickly in order to outbid other buyers for the short supply of affordable homes on the market.
“Those obtaining a mortgage last month were likely the last group of buyers to lock in a rate near historically low levels now that rates have marched to around 4 percent since the election,” Yun said.
The shortage of inventory comes as no surprise, though, according to the report. Yun says this lack of available homes for sale is merging with a time when price growth is still close to three times the pace of wage growth.
The report also depicts the the imbalance of supply to demand, with 40 percent of sales in October sold at or above list price.
“Low supply has kept prices elevated all year and has put pressure on the budgets of buyers,” says Yun. “With mortgage rates expected to rise into next year and put added strain on affordability, sales expansion will be contingent on more inventory coming onto the market and continued job gains.”
Broken down regionally, the index shows that pending home sales compared to the year prior grew 3.9 percent in the Northwest, 1.2 percent in the Midwest, 0.8 percent in the South, and 2.5 percent in the West.
“Most of the country last month saw at least a small increase in contract signings and more notably, activity in all four major regions is up from a year ago,” says Yun. “Despite limited listings and steadfast price growth that's now carried into the fall, buyer demand has remained strong because of the consistently reliable job creation in a majority of metro areas.”
To view the full Pending Home Sales Index, click here.