Pending home sales slipped in November, receding slightly after a previous month of gains, according to the National Association of Realtors (NAR). Each of the four major U.S. regions witnessed contract transactions decline month-over-month. Year-over-year activity mostly retreated too, as three regions reported drops and only the Midwest saw an increase.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, fell 2.2. percent to 122.4 in November. Year-over-year, signings slid 2.7 percent. An index of 100 is equal to the level of contract activity in 2001.
“There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices,” said Lawrence Yun, NAR’s chief economist. “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 notes that housing demand continues to be high, explaining that homes placed on the market for sale go from “listed status” to “under contract” in approximately 18 days.
“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,” he said. “These aspects, along with the exorbitant prices and a lack of available homes, have created a much tougher buying season.”
Yun adds that a countrywide surge of the omicron variant poses a risk to the housing market’s performance, as buyers and sellers are sidelined, and home construction is delayed.
November Pending Home Sales Regional Breakdown
Month-over-month, the Northeast PHSI declined 0.1 percent to 99.4 in November, an 8.5 percent drop from a year ago. In the Midwest, the index fell 6.3 percent to 116.8 last month, up 0.2 percent from November 2020.
Pending home sales transactions in the South ticked down 0.7 percent to an index of 148.2 in November, down 1.3 percent from November 2020. The index in the West slipped 2.2 percent in November to 105.5, down 4.6 percent from a year prior.