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Pending Home Sales at Lowest Level in a Year

graph-downNovember was not a good month for pending home sales, which are based on contract signings. According to the latest Pending Home Sales Index (PHSI) from National Association of Realtors (NAR), sales were at their lowest level in nearly a year while only one of four regions experienced gains both over-the-month and over-the-year.

The PHSI dropped from a level of 110.0 in October down to 107.3 in November and was down by 0.4 percent year-over-year. November’s reading of 107.3 was the lowest for the PHSI since January 2016, largely due to an ongoing shortage of homes available for sale, NAR reported. Not only that, but the abrupt increase in mortgage rates adversely affected affordability, according to Lawrence Yun, Chief Economist with NAR.

“The budget of many prospective buyers last month was dealt an abrupt hit by the quick ascension of rates immediately after the election,”. “Already faced with climbing home prices and minimal listings in the affordable price range, fewer home shoppers in most of the country were successfully able to sign a contract,” Yun said.

The Northeast was the only region out of four where pending home sales increased, rising by 0.6 percent over-the-month and 5.7 percent over-the-year in November. In the South, West, and Midwest regions, pending home sales declined both monthly and annually.

Fewer renters believe that now is a good time to buy a house as 2017 begins, according to a recent NAR survey, primarily due to increased borrowing costs.

“Healthy local job markets amidst tight supply means many areas will remain competitive with prices on the rise. Those rushing to lock in a rate before they advance even higher will probably have few listings to choose from,” Yun said. “Some buyers will have to expand the area of their home search or be forced to delay in order to save a little more money for their down payment.”

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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