Pending home sales saw a month-over-month decline during November, according to the data from the National Association of Realtors (NAR). However, sales were up from one year earlier.
NAR’s Pending Home Sales Index (PHSI) fell 2.6% to 125.7 in November, the third consecutive month of decline. But on a year-over-year measurement, contract signings climbed 16.4%. An index of 100 is equal to the level of contract activity in 2001.
On a regional measurement, the Northeast PHSI dropped 3.3% to 108.6 in November, a 15.3% increase from a year ago. In the Midwest, the index was down 3.1% to 115.9, up 14.1% from November 2019. Pending home sales in the South dipped by 1.1% to an index of 150.0 in November, up 21.3% from November 2019, and the index in the West tumbled by 4.7% in November to 111.3, which is up 10.4% from a year ago.
"The latest monthly decline is largely due to the shortage of inventory and fast-rising home prices," said Lawrence Yun, NAR’s Chief Economist. "It is important to keep in mind that the current sales and prices are far stronger than a year ago. The market is incredibly swift this winter with the listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates."
Yun predicted a favorable outlook for the housing market in 2021, forecasting a slight upward rise in mortgage rates from the current 2.7% to around 3%, adding existing-home sales should increase roughly 10% and new home sales by 20%.
"Economic growth is guaranteed from the stimulus package and from vaccine distribution, but high government borrowing will put modest upward pressure on interest rates," he added.
NAR’s data mirrored statistics recently released by the U.S. Census Bureau and the Department of Housing and Urban Development that found sales of new single-family houses in November were at a seasonally adjusted annual rate of 841,000, an 11% decline from October’s revised rate of 945,000 but also 20.8% above November 2019 estimate of 696,000. That data report also found the seasonally-adjusted estimate of new houses for sale at the end of November was 286,000, which represented a 4.1-month supply at the current sales rate, while the median sales price of new houses sold last month was $335,300 and the average sales price was $390,100.