Even though contract signings declined
in December it was the 20th straight month where pending home sales increased
on an annual basis. The National
Association of Realtors® (NAR) said that its Pending Home Sales Index (PHSI)
fell 4.34 percent in December to 101.7 from 106.3 in November. It was however 6.9 percent higher than in
December 2011 when it was 95.1.
The Pending Home Sales Index is a
forward looking indicator based on signed purchase agreements. Home sale transactions are generally expected
to close within two months of contract signing.
NAR's chief economist Lawrence Yun said the uptrend in home sales is uneven. "The
supply limitation appears to be the main factor holding back contract signings
in the past month. Still, contract activity has risen for 20 straight
months on a year-over-year basis," he said. "Buyer interest remains
solid, as evidenced by a separate Realtor® survey which shows that
buyer foot traffic is easily outpacing seller traffic."
Yun noted that
lower priced homes - those under $100,000 - are in short supply in most of the
country. "We expect a seasonal rise of inventory in the
spring to help, but a seller's market may be developing." He
said the West in particular offers few options for first-time buyers and many
parts of the region are already a sellers' market for homes priced under a
million dollars. On the other hand, he
said conditions are much more balanced in the Northeast.
tighter inventory, a pent-up demand and favorable affordability conditions bode
well for the market. Yun expects existing-home sales to increase another
9 percent in 2013, following a 9 percent rise in 2012.
The Index in
the Northeast fell 5.4 percent to 78.8 in December but is 8.4 percent higher
than a year earlier. In the Midwest the
index rose 0.9 percent to 104.8 in December, 14.4 percent above a year
ago. Pending home sales in the South declined 4.5 percent to an index of
111.5 in December but are still up 10.1 percent on an annual basis. In the West the index fell 8.2 percent in
December to 101.0 and is 5.3 percent below a year ago.