Slowing home sales

And according to NAR’s chief economist, Lawrence Yun, one of the main causes for the decline is rising interest rates.

“The budget of many prospective buyers last month was dealt an abrupt hit by the quick ascension of rates immediately after the election,” Yun said in NAR’s latest report. “Already faced with climbing home prices and minimal listings in the affordable price range, fewer home shoppers in most of the country were successfully able to sign a contract.”

According to NAR’s report, pending home sales fell in November to their lowest level in almost a year as the increase in mortgage rates and a lack of available inventory impacted some prospective buyers.

NAR’s latest Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 2.5% to 107.3 in November from 110 in October, which was the highest reading since July.

But after November’s decrease in activity, the index is now 0.4% below November 2015 (107.7) and at its lowest reading since January 2016 (105.4).

According to NAR’s data, only the Northeast saw monthly and annual pending sales gains in November.

Per NAR’s report, the PHSI in the Northeast inched forward 0.6% to 97.5 in November, and is now 5.7% above a year ago.

In the Midwest, the index fell 2.5% to 103.5 in November, and is now 2.4% lower than November 2015.

Pending home sales in the South declined 1.2% to an index of 118.7 in November, and are now 1.3% lower than the same time period last year.

The index in the West fell 6.7% in November to 101, and is now 1% below a year ago.

As NAR previously said earlier this month, the organization still believes that 2017 could see only a small gain in home sales, and November’s report buffets that prediction.

As Yun says, higher borrowing costs “somewhat cloud” the outlook for the housing market in 2017, but Yun notes that the forecast isn’t quite as gloomy as it may appear.