The index of pending home sales increased 1.2 percent in November after a fall in October that followed two consecutive months of increases, the National Association of Realtors (NAR) reported Monday (Dec. 30).
The NAR Pending Home Sales Index (PHSI), which measures the number of purchase contracts signed, rose to 108.5. Contract signings measured year over year were up 7.4 percent and pending home sales rose nationwide in all regions compared to 2018.
The West saw the steepest growth in November while the other three major U.S. regions — Midwest, South, and Northeast — saw negligible changes in month-over-month contract activity.
“Despite the insufficient level of inventory, pending home contracts still increased in November,” said Lawrence Yun, NAR’s chief economist. He added 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,” he said.
The consensus forecast at the NAR Real Estate Forecast Summit said gross domestic product (GDP) would rise 2.0 percent with 3.7 percent unemployment and a 3.8 percent average mortgage rate in 2020. Home prices were projected to rise by 3.6 percent in 2020 after a 5 percent gain in 2019. The median sales price for a home went up 5.4 percent from a year ago to $257,400.
“Sale prices continue to rise, but I am hopeful that we will see price appreciation slow in 2020,” said Yun. “Builder confidence levels are high, so we just need housing supply to match and more home construction to take place in the coming year.”
Mortgage rates have dropped dramatically, in step with the Federal Reserve’s drop in the benchmark short-term interest rate.
U.S. homeowners are staying in their homes longer, keeping much-needed inventory off the real estate market, which caused an earlier slip in home sales. A new analysis by Redfin found that homeowners around the country are typically staying in their homes for 13 years, five years longer than they did in 2010.