Pending Home Sales Fell 2.2% in December
Washington, DC, January 30, 2019-The Pending Home Sales Index decreased 2.2% to 99.0 in December, down from 101.2 in November, according to the National Association of Realtors. Additionally, year-over-year contract signings fell 9.8%, making this the twelfth straight month of annual decreases.
Lawrence Yun, NAR chief economist, cited several reasons for the decline in pending sales. “The stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December,” he said.
All four major regions experienced a decline compared to one year ago, with the South sustaining the largest decrease.
Yun says so far, the partial government shutdown has not caused any obvious damage to home sales. “Seventy-five percent of Realtors reported that they haven’t yet felt the impact of the government closure. However, if another government shutdown takes place, it will lead to fewer homes sold,” he said.
According to Yun, as the government reopens, more mortgage options will come available for consumers. “Some home transactions were delayed, but we now expect those sales to go forward,” he said.
Still, there is growth in certain pockets. Yun cited year-over-year increases in active listings from data at realtor.com to illustrate a potential rise in inventory. Denver-Aurora-Lakewood, Colorado, Seattle-Tacoma-Bellevue, Washington, San Francisco-Oakland-Hayward, California, San Diego-Carlsbad, California, and Portland-Vancouver-Hillsboro, Oregon-Washington saw the largest increase in active listings in December compared to a year ago.
Yun says despite the low home sales in December, he is confident that the housing market will see improvement in 2019. “The longer-term growth potential is high. The Federal Reserve announced a change in its stance on monetary policy. Rather than four rate hikes, there will likely be only one increase or even no increase at all. This has already spurred a noticeable fall in the 30-year, fixed-rate for mortgages. As a result, the forecast for home transactions has greatly improved, “Yun said.