Pending home sales fell 2.5 percent in the month of November, another indicator that the market is cooling off as 2017 approaches.
Economists Surveyed By The Wall Street Journal had actually expected pending home sales to rise 0.5 percent in November.
Lawrence Yun, the top economist for the National Association of Realtors, said the expected spike in interest rates combined with limited inventory and rising prices was largely to blame. The pending home sales index, which reached a seasonally adjusted 107.3 in November, dipped 0.4 percent year-over-year. The NAR considers 100 to be a healthy figure on the index.
“This was a disappointment relative to expectations for an increase during the month and a more downbeat signal on housing activity than the move up in mortgage purchase application volumes that also occurred in November,” J.P. Morgan Chase economist Daniel Silver said in a note to clients, according to the Journal.
Mortgage rates and prices are going up, which could lead to a weaker housing market in 2017, according to experts.
Earlier this month, the Federal Reserve raised interest rates for the first time since before the Financial Crisis. It also indicated it will raise short-term interest rates more aggressively next year than initially planned.