Tight Supply Blamed for Weaker Pending Home Sales

Even though contract signings declinedrnin December it was the 20^th straight month where pending home sales increasedrnon an annual basis.  The NationalrnAssociation of Realtors® (NAR) said that its Pending Home Sales Index (PHSI)rnfell 4.34 percent in December to 101.7 from 106.3 in November.  It was however 6.9 percent higher than inrnDecember 2011 when it was 95.1.</p

The Pending Home Sales Index is arnforward looking indicator based on signed purchase agreements.  Home sale transactions are generally expectedrnto close within two months of contract signing.</p

NAR’s chief economist Lawrence Yun said the uptrend in home sales is uneven. “Thernsupply limitation appears to be the main factor holding back contract signingsrnin the past month.  Still, contract activity has risen for 20 straightrnmonths on a year-over-year basis,” he said.  “Buyer interest remainsrnsolid, as evidenced by a separate Realtor^® survey which shows thatrnbuyer foot traffic is easily outpacing seller traffic.”</p

Yun noted thatrnlower priced homes – those under $100,000 – are in short supply in most of therncountry.   “We expect a seasonal rise of inventory in thernspring to help, but a seller’s market may be developing.”   Hernsaid the West in particular offers few options for first-time buyers and manyrnparts of the region are already a sellers’ market for homes priced under arnmillion dollars.  On the other hand, hernsaid conditions are much more balanced in the Northeast.</p

Even withrntighter inventory, a pent-up demand and favorable affordability conditions bodernwell for the market.  Yun expects existing-home sales to increase anotherrn9 percent in 2013, following a 9 percent rise in 2012.</p

The Index inrnthe Northeast fell 5.4 percent to 78.8 in December but is 8.4 percent higherrnthan a year earlier.  In the Midwest thernindex rose 0.9 percent to 104.8 in December, 14.4 percent above a yearrnago.  Pending home sales in the South declined 4.5 percent to an index ofrn111.5 in December but are still up 10.1 percent on an annual basis.  In the West the index fell 8.2 percent inrnDecember to 101.0 and is 5.3 percent below a year ago.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.