NAR: Pending sales inched 0.2% higher in Nov.

Published Monday, January 8, 2018

WASHINGTON – Jan. 2, 2018 – Pending home sales were mostly unmoved in November 2017, but they squeaked out a minor gain both on a monthly and annualized basis, according to the National Association of Realtors® (NAR).

Heading into 2018, existing-home sales and price growth are forecast to slow, primarily because of the altered tax benefits of homeownership affecting some high-cost areas.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 0.2 percent to 109.5 in November from 109.3 in October. With that modest increase, the November index remains at its highest reading since June (110.0), and is 0.8 percent higher year-to-year.

Contract signings mustered a small gain in November and were up annually for the first time since June, says Lawrence Yun, NAR chief economist.

"The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear," Yun says. "However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust. Realtors say many would-be buyers from earlier this year, stifled by tight supply and higher prices, are still trying to buy a home."

One of the biggest questions in 2018, according to Yun, is if the depressed levels of available supply can improve enough to slow price growth and make buying a home more affordable. While November's significant boost in existing sales was noteworthy, it did come with some concerns. Sales prices were up 5.8 percent – more than double wage growth – and the 3.4-month supply of homes on the market was the lowest since NAR began tracking in 1999.

"The strengthening economy and expectation that more millennials will want to buy, serve as promising signs for solid home buying demand this year, while also putting additional pressure on inventory levels and affordability," says Yun. "Sales do have room for growth in most areas, but nationally, overall activity could be slightly negative. Markets with high home prices and property taxes will likely feel some impact from the reduced tax benefits of owning a home."

Yun forecasts that existing-home sales will have finished 2017 at around 5.54 million, which is an increase of 1.7 percent from 2016 (5.45 million). The national median existing-home price is expected to increase around 6 percent.

In 2018, Yun anticipates essentially no change (a decline of 0.4 percent) in existing sales (5.52 million), and price growth to moderate to around 2 percent.

The PHSI in the Northeast jumped 4.1 percent to 98.9 in November and is now 1.1 percent above a year ago. In the Midwest, the index rose 0.4 percent to 105.8 in November and is now 0.8 percent higher than November 2016.

Pending home sales in the South decreased 0.4 percent to an index of 123.1 in November but are still 2.5 percent higher than last November. The index in the West declined 1.8 percent in November to 100.4 and is now 2.3 percent below a year ago.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.

© 2018 Florida Realtors  

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