The National Association of Realtors (NAR) released their report on pending home sales for October 2019. What is shows is that pending home sales nationwide is down 1.7% with only the Northeast region showing an increase in sales. A sale is listed as pending when the contract has been signed however the transaction has not closed. The expectation is that the sale would be finalized within 2 months.
NAR uses their Pending Home Sales Index (PHSI) which they state is an indicator based on contract signings. A index number of 100 on the PHSI is equivalent to the activity in 2001. Their indicator dropped 1.7% to 106.7 in October of 2019. The positive result of the index is that the PHSI is up 4.4% from the same time in 2018.
Lawrence Yun, chief economist for the NAR believes that an uptick in mortgage rates and decrease inventory has affected pending home sales nationwide. Overall he remains positive on the market. He states “While contract signings have decreased, the overall economic landscape remains favorable. Mortgage rates continue to be low at below 4% – which will attract buyers – employment levels are strong and many recession claims have dissipated.” A continuing call for more available inventory in housing is needed according to Mr. Yun stating “We still need to address and, more importantly, correct inadequate levels of inventory across the country. There is no shortage of buyers seeking homes, but a lack of available units continues to drag down the nation’s housing market and overall economy. We risk a lingering shortage of sufficient inventory if homebuilding only continues at its current pace over the next 20 years, when the U.S. population is projected to increase by more than 40 million over this period. Clearly, home builders must step in and construct more housing.”
Here is a breakdown per region of pending home sales:
Northeast: Northeast saw an increase in the PHSI of1.9% to 95.7 in October. This is 3.0% higher for the same time a year ago.
West: The West saw a decrease of 3.4% for October 2019 to 91.9. The positive is that the PHSI is up 7.5% from October 2018.
South: The South is down 1.7% to an index of 125.3 in October. The PHSI is up 5.1% year over year.
Midwest: The Midwest’s PHSI is down 2.7% to 101.4 last month. Overall it is up 1.8% from the same time last year.
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