WASHINGTON (12/31/15)--Rising prices and limited selection dragged down pending-home sales in November--the third such slump in the past four months.
The pending-home sales index decreased 0.9% to 106.9 in November from an upwardly revised 107.9 in October, according to the National Association of Realtors (NAR). The index is still 2.7% higher than the 104.1 seen in November 2014.
“Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months despite low mortgage rates and solid job gains," said Lawrence Yun, NAR chief economist.
He added that the slide downward in contract activity continues the slowing trend experienced since pending sales peaked at a 9-year high in May.
Larger declines in the Northeast and West offset slight gains in the Midwest and South. Regional index numbers are:
Supply constraints and faster price appreciation will bloom in the spring because of lower existing-home inventory and deficient new-home construction, Yun said.
"Especially with mortgage rates likely on the rise, affordability issues could creep up enough to temper sales growth--especially to first-time buyers in higher priced markets," he said.
Existing-home sales are forecast to finish 2015 at a pace of roughly 5.25 million--the highest since 2006. The number is roughly 25% below 2005’s peak of 7.08 million.