Pending Home Sales Declined 3.8% in December
Washington, DC, January 27, 2022-The Pending Home Sales Index (PHSI) fell 3.8% to 117.7 in December, according to the National Association of Realtors. Year-over-year, transactions decreased 6.9%. An index of 100 is equal to the level of contract activity in 2001.
"Pending home sales faded toward the end of 2021, as a diminished housing supply offered consumers very few options," said Lawrence Yun, NAR's chief economist. "Mortgage rates have climbed steadily the last several weeks, which unfortunately will ultimately push aside marginal buyers."
Even with December's slowdown in transactions, Yun says last year was an overall great period for housing in terms of sales and price appreciation.
"The market will likely endure a minor reduction in sales as mortgage rates continue to edge higher," he added.
Yun forecasts the 30-year fixed mortgage rate to jump to 3.9% by the fourth quarter and existing-home sales to dip by 2.8% to 5.95 million units.
With December marking a third straight month of increased home construction, Yun expects housing inventory to continue improving and contribute to slower home price growth in 2022. He forecasts housing starts to rise to 1.65 million units and home prices to increase 5.1%.
"The combination of a more measured demand and rising supply will bring housing prices better in line with wage growth," Yun said.
Realtor.com's Hottest Housing Markets data in December showed that out of the largest 40 metros, the most improved markets over the past year were Orlando-Kissimmee-Sanford, Florida; Tampa-St. Petersburg, Florida; Jacksonville, Fla.; Dallas-Fort Worth-Arlington, Texas; and Denver-Aurora-Lakewood, Colorado.