Abnormal weather was partially
blamed by the National Association of Realtors® (NAR) for a substantial drop in
its December Pending Home Sales Index (PHSI).
The index, released this morning, fell 8.7 percent from November to 92.4
in December, the lowest level since October
2011, when the index was 92.2. The
November index, previously reported to have broken a five month losing streak
with a slight increase from October to 101.7 was revised down today to 101.2
making December is the 7th consecutive month in which pending sales
have slipped. The December number is 8.8
percent below the 101.3 level in December 2012.
NAR's index is a forward-looking
indicator based on contract signings for the purchase of existing homes. Sales transactions are generally expected to
close within 60 days of contract signing.
Lawrence Yun, NAR
chief economist, said of the decline, "Unusually disruptive weather across
large stretches of the country in December forced people indoors and prevented
some buyers from looking at homes or making offers. Home prices rising faster than income is also
giving pause to some potential buyers, while at the same time a lack of
inventory means insufficient choice." He
added that it could take several months to get a clearer read on market
momentum but job growth and pent-up demand are positive factors.
in the PHSI was noted in all four regions.
In the Northeast it dropped 10.3 percent to 74.1 in December, and is 5.5
percent below a year ago. In the Midwest
the index declined 6.8 percent to 93.6 in December, 6.9 percent below its level
in December 2012. Pending home sales in the South fell 8.8 percent to an index
of 104.9 in December, and are 6.9 percent below a year ago. The West, which NAR says is most impacted by
constrained inventory, saw a decline of 9.8 percent in December to 85.7, and is
16.0 percent below December 2012.
NAR says total existing-home sales this year should hold close to 5.1 million,
essentially the same as 2013, but inventory remains limited in much of the
country. The national median existing-home is projected to rise about 5.4
percent in 2014.