Reflecting several negative factors, the National Association of Realtors released a report on Wednesday unexpectedly showing a continued decrease in U.S. pending home sales in the month of December.
NAR said its pending home sales index tumbled by 2.2 percent to 99.0 in December after falling by 0.9 percent to a downwardly revised 101.2 in November.
The continued decline in pending home sales surprised economists, who had expected the index to climb by 0.5 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Compared to the same month a year ago, pending home sales plunged by 9.8 percent, reflecting the twelfth straight month of annual decreases.
“The stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December,” said NAR chief economist Lawrence Yun.
The unexpected decrease in pending home sales was partly due to a steep drop in the South, where pending sales plummeted by 5 percent.
Pending home sales in the Midwest also fell by 0.6 percent, while pending sales in the Northeast and West jumped by 2.0 percent and 1.7 percent, respectively.
Despite the low home sales in December, Yun said he is confident that the housing market will see improvement in 2019. “
“The longer-term growth potential is high. The Federal Reserve announced a change in its stance on monetary policy,” Yun said. “Rather than four rate hikes, there will likely be only one increase or even no increase at all.”
“This has already spurred a noticeable fall in the 30-year, fixed-rate for mortgages,” he added. “As a result, the forecast for home transactions has greatly improved.”
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