Pending home sales technically rose slightly in
November, 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 percent
lower than in November 2012 when it was 103.3.
The Index is a forward looking indicator
based on home purchase contract signings. Completed sales are usually expected
within two months of contract signing.
Lawrence Yun, NAR chief economist, said the market is
flattening. "We may have reached a cyclical low because the positive
fundamentals of job creation and household formation are likely to foster a
fairly stable level of contract activity in 2014," he said. "Although the final
months of 2013 are finishing on a soft note, the year as a whole will end with
the best sales total in seven years."
Yun said the
market still favors buyers in most of the country, but higher mortgage interest
rates in combination with strong price gains mean a more modest growth in
values is expected in 2014.
Increases in activity
in the South and West offset declines in the Northeast and Midwest. The Index in the Northeast declined 2.7
percent to 82.6 in November, but is 1.9 percent above a year ago. In the
Midwest the index fell 3.1 percent to 100.6 in November, but is 0.4 percent
higher than November 2012. Pending home sales in the South rose 2.3 percent to
an index of 116.1 in November, and are 0.1 percent above a year ago. The index
in the West increased 1.8 percent in November to 95.0, but is 8.7 percent below
November 2012, in part from inventory constraints.
that the year will end with total existing-home sales of 5.1 million, a gain of
almost 10 percent over 2012. Sales in
2014 are expected to remain around that same level but will rise to 5.3 million
median existing-home price in 2013 is forecast to reflect nearly a 12 percent
increase to $197,300. It is also
expected to level off and rise at a more moderate pace of 5 to 5.5 percent in
2014 followed by 4 percent growth in 2015.
Home Sales Index is based on a large national sample, typically representing
about 20 percent of transactions for existing-home sales. An index of 100 is
equal to the average level of contract activity during 2001, which was the
first year to be examined and is generally considered to be a typical year for