Pending home sales – a forward-looking indicator based on contract signings – inched up in the final month of December, mostly due to a substantial increase in sales in the Northeast, according to the National Association of REALTORS®’ latest reading, released Thursday.
Contract signings were up just 0.1 percent nationwide to 106.8 in December, but are now 4.2 percent higher than a year ago. For 16 consecutive months, NAR’s Pending Home Sales Index has seen year-over-year increases. Contract activity closed out 2015 on stable footing but did lose some momentum in December, with the Northeast being the exception, says Lawrence Yun, NAR’s chief economist.
“Warmer than average weather and more favorable inventory conditions compared to other parts of the country encouraged more households in the Northeast to make the decision to buy last month,” Yun says. “Overall, while sustained job creation is spurring more activity compared to a year ago, the ability to find available homes in affordable price ranges is difficult for buyers in many job creating areas. With homebuilding still grossly inadequate, steady price appreciation and tight supply conditions aren’t going away any time soon.”
Housing demand could be hampered somewhat in the months ahead too, Yun adds. Stock market losses since the start of the year combined with slowing manufacturing activity in some areas – especially in the energy sector – could cause a reduction in home buying activity. That said, Yun notes that mortgage rates have slightly fallen in recent weeks, which could help the market. “Buyers looking to close on a home before the spring buying season begins may be rewarded with a mortgage rate at or below 4 percent,” Yun says.
Overall, NAR predicts existing-home sales will reach about 5.34 million in 2016, which would mark a 1.5 percent year-over-year increase. Median existing-home prices for 2016 are forecasted to be up 4 and 5 percent, which would follow a 6.8 percent year-over-year gain in 2015.