Home Sales Likely to Continue Slowdown, but Still Running at Record Pace
Over the last few weeks, various reports showed that home sales are slowing down as the weather gets colder, but the news isn’t all bad. Far from it, in fact.
Recently, data from the National Association of Realtors showed that pending home sales, an indicator of future home sales based on signed real estate contracts, fell in the month of October, suggesting that sales could be slowing down.
That was confirmed when the actual existing-home sales data came in for November, showing that sales fell by 2.5%, ending a five-month streak of increases.
And that trend looks like it’s going to continue, as the latest pending home sales data showed that contract signings fell in November as well, meaning that December and January’s sales will likely show slowdowns as well.
According to NAR, pending home sales fell 2.6% from October to November, the third straight month of declines.
But there’s good news in November’s data. According to the report, contract signings in November 2020 were up 16.4% over November 2019.
Beyond that, November 2020’s pending home sales were the highest in any November on record, meaning that signed contracts are running at a record-breaking pace despite falling from October.
According to NAR, each of the four main regions of the U.S. (Northeast, South, Midwest, West) saw their pending home sales fall in November compared to October, but each ran well above where they were the year before.
As for why contract signings declined in November, the story is same as it has been for months: there aren’t enough homes on the market and home prices are rising too quickly.
“The latest monthly decline is largely due to the shortage of inventory and fast-rising home prices,” NAR Chief Economist Lawrence Yun said.
“It is important to keep in mind that the current sales and prices are far stronger than a year ago,” Yun continued. “The market is incredibly swift this winter with the listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates.”