The number of home buyers who signed a contract to purchase a home in November declined, as high home prices give buyers pause.
Pending home sales decreased 2.2% in November compared with October, the National Association of Realtors reported Wednesday. Economists polled by MarketWatch had projected a 0.8% increase for pending home sales in November.
The pending home-sales index gauges real-estate transactions where a contract was signed for a previously-owned home, but the sale has yet to close, and it is benchmarked to contract-signing activity in 2001. The index provides insight into the direction of existing-home sales data will take in the months to come, which is based on closed transactions.
Compared to a year ago, pending sales were down 2.7%, according to the report. On a monthly basis, every region reported a drop in contract signings in November. The Midwest notched the largest decrease, with a 6.3% decline.
The big picture
Buyers might be getting cold feet, according to National Association of Realtors chief economist Lawrence Yun. “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,” he said.
Many housing economists expect that the short supply of homes for sale will improve next year as more sellers enter the market, which Yun said could ease the affordability constraints some buyers are facing. However, the market has a major headwind in the form of the omicron variant to the extent that a surge in cases could delay sales and home construction activity.
What they’re saying
“The early part of the year is recently among the most competitive seasons, with buyers aiming to get a jump-start on new year’s resolutions, while sellers tend to wait until the heart of spring to list homes for sale,” said Danielle Hale, chief economist at Realtor.com.