Pending home sales in the United States continue to decline with a 0.7% month-over-month drop in November.
The National Association of Realtors reports that its Pending Home Sales index was down 7.7% year-over-year, marking the eleventh consecutive month of decline in the annual figure.
Lawrence Yun, NAR’s chief economist, says the figures do not yet reflect other factors.
“The latest decline in contract signings implies more short-term pullback in the housing sector and does not yet capture the impact of recent favorable conditions of mortgage rates,” he said.
The PHSI is at its lowest point in almost 5 years but Yun says there are reasons to be optimistic for the long-term.
All four of the major regions posted annual declines although the Northeast and the West saw minor monthly increases.
Too much too fast
The West is the largest drag on the national figure year-over-year and Yun says home prices there have risen too much too fast.
“Land cost is expensive, and zoning regulations are too stringent. Therefore, local officials should consider ways to boost local supply; if not, they risk seeing population migrating to neighboring states and away from the West Coast,” he said.
Yun says that the US government shutdown will negatively impact the housing market as flood insurance is not currently available. This will halt potential sales of 40,000 homes where flood insurance is required.
“The longer the shutdown means fewer homes sold and slower economic growth,” warned Yun.
November Pending Home Sales Regional Breakdown
The PHSI in the Northeast rose 2.7% to 95.1 in November and is now 3.5% below a year ago. In the Midwest, the index fell 2.3% to 98.1 in November and is 7.0% lower than November 2017.
Pending home sales in the South fell 2.7% to an index of 115.7 in November, which is 7.4% lower than a year ago. The index in the West increased 2.8% in November to 87.2 and fell 12.2% below a year ago.
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