Pending Home Sales Fell in November as Inventory Shrank, NAR Says
U.S. pending home sales declined by 2.2% in November, reversing the upswing in the previous month.
A seasonally adjusted index measuring signed contracts fell 2.2% from a month earlier to 122.4, according to a report on Wednesday from the National Association of Realtors. The index was 2.7% below the year-ago level.
Home sales were crimped by escalating prices and a shortage of listings, said Lawrence Yun, NAR’s chief economist. The inventory of homes available for purchase in November fell to a 2.1 months supply, a record low for the month, according to NAR data.
The supply problem likely will ease in 2022 as homebuilders bring more properties to the market, Yun said.
“While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability,” Yun said.
Single-family housing starts, measuring when builders break ground on new houses, probably will increase 14% to 1.13 million next year, the highest since 2006, the peak of the last housing boom, according to a forecast from NAR.
Consumers are still eager to take advantage of lower mortgage rates before financing costs increase in 2022 as the Federal Reserve tightens monetary policy, Yun said.
Housing demand remained high in November and homes placed on the market went from “listed status” to “under contract” in approximately 18 days, he said.
“Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply chain disruptions and labor shortages this year,” Yun said. “These aspects, along with the exorbitant prices and a lack of available homes, have created a much tougher buying season.”
One factor that could hamper the number of homes that are sold is the national surge of the Covid-19 omicron variant since both buyers and sellers could be sidelined and home construction could run into additional delays, he said.
NAR estimated that the number of home sales will rise by 6.4% in 2021 and decline by 1.7% in 2022 as mortgage rates increase.
Home-price growth also will moderate, Yun said. This year, the gain is likely to be 15%, and next year it probably will slow to 2.8%, he said.
The average U.S. rate for a 30-year fixed home loan was 3.07% in November which is flat compared to October, according to Freddie Mac.
The rate likely will average 3.1% in the current quarter, rising from 2.9% in the prior three months, Yun said. By 2022’s fourth quarter, it likely will average 3.7%, he said.