Pending home sales slip in November

Pending home sales slipped in November, the National Association of Realtors reported today.

Following a month of gain, the Pending Home Sales Index (PHSI) fell 2.2.% to 122.4 in November.

“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.

The PHSI is a forward-looking indicator of home sales based on contract signings. Year-over-year, signings slid 2.7%. An index of 100 is equal to the level of contract activity in 2001.

“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,” said Yun.

Yun noted 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.”

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, said Yun.

Realtor.com^’s Hottest Housing Markets most recent data showed that out of the largest 40 metros, the most improved markets over the past year were Orlando-Kissimmee-Sanford, Fla.; Tampa-St. Petersburg, Fla.; Dallas-Fort Worth-Arlington, Texas; Jacksonville, Fla.; and Denver-Aurora-Lakewood, Colo.

Here’s how pending home sales break down by region:

• Month-over-month, the Northeast PHSI declined 0.1% to 99.4 in November, an 8.5% drop from a year ago.
• In the Midwest, the index fell 6.3% to 116.8 last month, up 0.2% from November 2020.
• Pending home sales transactions in the South ticked down 0.7% to an index of 148.2 in November, down 1.3% from November 2020.
• The index in the West slipped 2.2% in November to 105.5, down 4.6% from a year prior.