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US Pending Home Sales Plunge in December: NAR

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US Pending Home Sales Plunge in December: NAR

Pending home sales in the United States fell measurably in December, as severe weather and declining affordability kept housing activity at a stand-still.

A gauge of pending home sales, courtesy of the National Association of Realtors, fell 8.7 percent in December, following a drop of 0.3 percent the previous month. On an annualized basis, pending home sales declined 8.8 percent.

Contracts to purchase existing homes declined in all four regions, led by the Northeastern United States, where contract activity fell 10.3 percent from November. Contract activity fell 9.8 percent in the West, 8.8 percent in the South and 6.8 percent in the Midwest, the trade group said.

“Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes or making offers,” said Lawrence Yun, NAR chief economist. “Home prices rising faster than income is also giving pause to some potential buyers, while at the same time a lack of inventory means insufficient choice.”

The housing market has struggled in recent months due to higher home prices and rising mortgage rates. Those trends appear to have weakened, at least momentarily, according to the Standard & Poor’s/Case Shiller 20-city home price index. Lower house prices also drove down mortgage rates, according to Freddie Mac. The average US rate for a fixed 30-year mortgage fell from 4.39 percent to 4.32 percent last week. The rate for a 15-year mortgage eased from 3.44 percent to 3.4 percent.

Although it could take several months to determine the trajectory of the US housing market, “job growth and pent-up demand” could keep the underlying momentum going, according to Yun.

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