Pending Home Sales Slide 2.2% in November

According to the National Association of Realtors (NAR), pending home sales slipped in November, dropping 2.2.% from October as found by NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings. Year-over-year, contract signings slid 2.7% in November.

“There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices,” said Lawrence Yun, NAR’s Chief Economist. “While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022, and that will help some consumers with affordability.”

According to a recent report from Redfin, the number of homes for sale nationwide fell 18% year-over-year in November to an all-time low. This lack of the nation's housing inventory sent the median sales price up 15% to $383,100.

“Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply chain disruptions and labor shortages this year,” Yun said. “These aspects, along with the exorbitant prices and a lack of available homes, have created a much tougher buying season.”

In terms of supply chain disruptions, the price of lumber and materials continues to impact the price of new construction, as National Association of Home Builders (NAHB) Chairman Chuck Fowke, a custom home builder based in Tampa, Fla., noted, “builders are still grappling with major supply chain issues and soaring materials costs, which are causing construction delays.”

“The cost of lumber rose from $573 at the start of November, to $825 per thousand board feet by the end of the month, and moved into the $1,100s per thousand board feet in December, following the Commerce Department’s announcement that it will double the import duties on Canadian softwood in 2022,” said George Ratiu, Realtor.com’s Manager of Economic Research.

Realtor.com's Hottest Housing Markets most recent data showed that out of the largest 40 metros, the most improved markets over the past year were:

• Orlando-Kissimmee-Sanford, Florida
• Tampa-St. Petersburg, Florida
• Dallas-Fort Worth-Arlington, Texas
• Jacksonville, Florida
• Denver-Aurora-Lakewood, Colorado

Regionally, month-over-month, the Northeast PHSI declined 0.1% in November, an 8.5% drop from a year ago. In the Midwest, the PHSI fell 6.3% last month, up 0.2% from November 2020. Pending home sales transactions in the South ticked down 0.7% in November, down 1.3% from November 2020. The PHSI in the West slipped 2.2% in November, down 4.6% from a year prior.

“The final pending home sales report of the year confirms that 2021 has been a very strong year for the housing market,” said First American Deputy Chief Economist Odeta Kushi. “The housing market enters 2022 with robust demand but near record-low inventory, which means house price growth will remain elevated.”