Year-Over-Year Contract Signings for Pending Home Sales Jumped 7.4%
The National Association of Realtors (NAR) Pending Home Sales Index (PHSI) rebounded in November, rising 1.2% from October to 108.5. Year-over-year contract signings jumped 7.4%.
The PHSI stood at 106.7 in October and was expected to gain slightly less than the reading. Forecasts ranged from a low of 0.0% to a high of 1.5%. The consensus was looking for a gain of 1.1%.
An index of 100 is equal to the level of contract activity in 2001.
Regionally, the West posted the highest rate of growth in November. While the other three major U.S. regions saw marginal changes in monthly contract activity, pending home sales gained both nationally and in all regions compared to one year ago.
“Despite the insufficient level of inventory, pending home contracts still increased in November,” said Lawrence Yun, NAR’s chief economist, noting that housing inventory has been in decline for six straight months dating back to June 2019. “The favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”
The consensus at the NAR Real Estate Forecast Summit called for home prices to rise by 3.6% in 2020 after gaining 5% in 2019.
“Sale prices continue to rise, but I am hopeful that we will see price appreciation slow in 2020,” Mr. Yun added. “Builder confidence levels are high, so we just need housing supply to match and more home construction to take place in the coming year.”
Builder confidence has held strong and residential construction is reaping the benefits.
November Pending Home Sales Regional Breakdown
The PHSI in the Northeast slid 0.1% to 96.3 in November, which is 2.6% higher than last year. In the Midwest, the index rose 1.0% to 102.5, 5.0% higher than in November 2018.
Pending home sales in the South ticked down slightly by 0.2% to 125.0 in November, though are still 7.7% higher than November 2018. In the West, the PHSI jumped 5.5% to 98.4, a solid gain of 14.0% from a year ago.
