While new home sales contracts surged in November, pending sales on existing homes across the U.S. fell. The decrease came on the heels of a sudden rise in interest rates and continued limited inventory, according to figures released by the National Association of Realtors.
Todays news, reported by Bloomberg, cites some notable declines in the housing market:
- Pending home sales gauge declined 2.5 percent (forecast was for 0.5 percent gain) after rising 0.1 percent the prior month
- Pending sales decreased in three of four U.S. regions on a month-to-month basis
- Purchases decreased 6.7 percent in the West, the biggest decline since July 2013; index fell 2.5 percent in the Midwest to the lowest level since January
- Measure of contract signings in the South, the nation’s largest region, declined 1.2 percent to the weakest level since September 2014
- Seasonally adjusted pending-sales gauge fell in November to 107.3, the lowest since January
This drop in contract signings is the first in three months and shows the impact of a post-election rate increase. While NAR economist Lawrence Yun projects 5.42 million home sales this year (the strongest since 2006), he also contends that affordability is at stake if mortgage rates continue to rise, as property values have stayed steadily ahead of income growth.