Pending Home Sales Remain Near 1.5-Year Lows

Pending home sales technically rose slightly inrnNovember, but only after a negative downward revision to October’s Pending Home Sales Index (PHSI) from the 102.1 originally reported to 101.5.  That marked the lowest level in more than a year and a half, and substantial drop from May’s 111.3.  Today’s reading of 101.7 is 1.6 percentrnlower than in November 2012 when it was 103.3.  </p

The Index is a forward looking indicatorrnbased on home purchase contract signings. Completed sales are usually expectedrnwithin two months of contract signing.  </p

Lawrence Yun, NAR chief economist, said the market isrnflattening. “We may have reached a cyclical low because the positivernfundamentals of job creation and household formation are likely to foster arnfairly stable level of contract activity in 2014,” he said. “Although the finalrnmonths of 2013 are finishing on a soft note, the year as a whole will end withrnthe best sales total in seven years.”</p

Yun said thernmarket still favors buyers in most of the country, but higher mortgage interestrnrates in combination with strong price gains mean a more modest growth inrnvalues is expected in 2014.</p

Increases in activityrnin the South and West offset declines in the Northeast and Midwest.  The Index in the Northeast declined 2.7rnpercent to 82.6 in November, but is 1.9 percent above a year ago. In thernMidwest the index fell 3.1 percent to 100.6 in November, but is 0.4 percentrnhigher than November 2012. Pending home sales in the South rose 2.3 percent tornan index of 116.1 in November, and are 0.1 percent above a year ago. The indexrnin the West increased 1.8 percent in November to 95.0, but is 8.7 percent belowrnNovember 2012, in part from inventory constraints.</p

NAR projectsrnthat the year will end with total existing-home sales of 5.1 million, a gain ofrnalmost 10 percent over 2012.  Sales inrn2014 are expected to remain around that same level but will rise to 5.3 millionrnin 2015. </p

The nationalrnmedian existing-home price in 2013 is forecast to reflect nearly a 12 percentrnincrease to $197,300.  It is alsornexpected to level off and rise at a more moderate pace of 5 to 5.5 percent inrn2014 followed by 4 percent growth in 2015.</p

The PendingrnHome Sales Index is based on a large national sample, typically representingrnabout 20 percent of transactions for existing-home sales. An index of 100 isrnequal to the average level of contract activity during 2001, which was thernfirst year to be examined and is generally considered to be a typical year forrnhome sales.

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