Pending home sales remained steady during the early fall season but when compared to previous numbers this is actually is a gain.
October’s numbers show these sales mostly were unmoved; however this is a shift from the declines two months prior.
The Pending Home Sales Index is a leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos and co-ops
The October numbers from the National Association of REALTORS® indicate drops in pending home sales in the Midwest and South regions were offset by the gains in the West and the Northeast areas.
As a forward-looking indicator, the Pending Home Sales Index is based on contract signings and not completed closings. The October numbers show a slight increase, moving from 0.2 percent to 107.7 from September’s 107.5.
When compared to a year ago, the October Pending Homes Sales Index rose 3.9 percent from 103.7 received in October 2014. In fact, the index has continually increased year-over-year for 14 consecutive months.
Inventory Issues and Rising Home Prices
Real estate experts believe the number of pending homes sales would be a lot higher if the inventory wasn’t so tight. According to the National Association of REALTORS® Chief Economist Lawrence Yun, buyers have had a tough time finding the right homes from the scant number of ones that are currently listed. Because of this, fall sales have plateaued.
In response to the tighter inventory, home owners placing their homes on the market have hiked their pricing, and in some markets the rise is moving a bit faster than a healthy norm would call for.
Homes in the West and South lying in highly competitive metropolitan areas, such as Coral Gables luxury homes and Weston luxury homes, are watching prices be driven up due to low inventory which causes affordability concerns.
The highest strides made on signings of home contracts during this month were evident in the Northeast. This area of the country hasn’t experienced the drastic price appreciation and supply constraints that other parts of the country are having to deal with.
Home Buying Spurred by Jobs
The improved demand for buying may be continuing to be fueled by the ongoing strengthening of several local job markets, including those looking at Coral Gables luxury homes and Weston luxury homes. However, when looking at the contract activity all the way back to the spring, there has been a slight trend downward, Yun reports.
Currently, the areas in the country that have begun showing a softness in sales, according to Yun, are those places that are heavily reliant on oil-related jobs. With the decline in energy prices, sales can be expected to stall.
Future Numbers on Existing Sales
According to the NAR numbers, existing sales have pushed past the 5 million sales pace for eight consecutive months. This is great news for all real estate markets, including Coral Gables luxury homes and Weston luxury homes. At a recent 2015 REALTORS® Conference & Expo, Yun presented his outlook for the end of the year and the upcoming one. He expects existing home sales to finish 2015 at a pace of 5.30 million. This will be the highest since 2006. He also sees demand to continue to remain stable through the final two months of the year.
Sales growth is likely to be tempered to around 3 percent (5.45 million) in 2016 because of the affordability pressures from rising prices and ongoing inventory shortages.
Home prices are expected to slightly moderate from a 6 percent increase in 2015 to 5 percent next year.
