Pending home sales decline for third straight month

Still, homebuyers are inking more deals than in 2019

National /
Dec.December 30, 2020 04:03 PM
 U.S. pending home sales declined for the third consecutive month. (iStock)

U.S. pending home sales declined for the third consecutive month. (iStock)

 

A measure of pending home sales declined for the third consecutive month, as prices rise and inventory shrinks.

The National Association of Realtors’ pending home sales index declined 2.6 percent in November from the previous month. That represents a much steeper decline than October’s, when pending home sales ticked down 1.1 percent from the previous month. The monthly index tracks contract signings and closings for existing single-family homes, condos and co-ops. Closings usually occur within a month or two of the contract signing.

Despite the consecutive months of decline, contract signings remain elevated compared to the previous year. Contract signings were up 16.4 percent year over year in November — an all-time record.

Lawrence Yun, NAR’s chief economist, attributed the monthly decline in pending home sales to a shortage of available homes and rising prices. “It is important to keep in mind that the current sales and prices are far stronger than a year ago,” Yun said.

The median home price reached an all-time high in July, exceeding $300,000, as workers, untethered from their offices, hunted for digs with more space for remote working and virtual school. An S&P index which tracks home prices in major metropolitan areas showed prices were up 8.4 percent year over year in October — a growth rate not seen for more than six years.

With more buyers on the market, the supply of homes has also dwindled. Homes under $100,000 were the hardest to come by in November, with 38 percent fewer on the market compared to 2019. By comparison, the supply of homes priced at more than $1 million were down only 1.4 percent year over year.

In 2021, Yun predicted that mortgage rates will rise slightly, to 3 percent from the current 2.7 percent, due to government borrowing.

But with the vaccine and a congressional relief package on the way, Yun anticipates the new year will also bring a 10 percent rise in sales of existing homes and a 20 percent rise in new home sales.





    Related Articles

    arrow_forward_ios
    Photo illustration of Ribbon Home CEO Shaival Shah and Orchard Technologies CEO Court Cunningham carrying homes
    Power buyers saddled with homes
    Power buyers saddled with homes
    National Association of Realtors Senior Economist Nadia Evangelou
    The Fed’s latest hike could kickstart mortgage demand
    The Fed’s latest hike could kickstart mortgage demand
    The Oppenheim Group's Jason Oppenheim (The Oppenheim Group, Getty)
    Commission suits could spell “armageddon”: Jason Oppenheim
    Commission suits could spell “armageddon”: Jason Oppenheim
    From left: Top Agent Network CEO David Faudman, NAR president Kenny Parcell, and Attorney General Merrick Garland (Getty, Top Agent Network)
    Justice Department wants say in pocket listings case against NAR
    Justice Department wants say in pocket listings case against NAR
    (Photo Illustration by Steven Dilakian for The Real Deal with Getty)
    Mortgage applications surge 25% in the new year as interest rates drop
    Mortgage applications surge 25% in the new year as interest rates drop
    A photo illustration of NAR president Kenny Parcell (Getty, NAR)
    NAR hit record membership in 2022, but expects a drop
    NAR hit record membership in 2022, but expects a drop
    (Getty; Illustration by The Real Deal)
    Brokering while Black: Agents share tales of discrimination
    Brokering while Black: Agents share tales of discrimination
    NAR president Kenny Parcell (Illustration by The Real Deal with Getty, NAR)
    Supreme Court rejects NAR petition in pocket listing case
    Supreme Court rejects NAR petition in pocket listing case
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...