According to the National Association of Realtors, pending home sales were mostly unchanged in October, but shifted marginally higher after two straight months of declines. Gains in the Northeast and West were offset by declines in the Midwest and South.
The Pending Home Sales Index increased from 107.5 to 107.7 in October and is now 3.9 percent above Oct. 2014. The index has increased year-over-year for 14 consecutive months.
Lawrence Yun, NAR’s chief economist, stated that pending sales have plateaued this fall as buyers struggle to overcome a scant number of available homes for sale and prices that are rising too fast in some markets.
“Contract signings in October made the most strides in the Northeast, which hasn’t seen much of the drastic price appreciation1 and supply constraints that are occurring in other parts of the country,” he said. “In the most competitive metro areas – particularly those in the South and West – affordability concerns remain heightened as low inventory continues to drive up prices.”
Although contract activity has slightly trended downward since the spring, the ongoing strengthening of several local job markets continues to fuel the improved demand for buying that has now pushed existing-sales above a 5 million sales pace for eight consecutive months.
Yun presented his 2016 economic outlook and housing forecast earlier this month at the 2015 Realtors Conference & Expo in San Diego. With demand expected to remain stable through the final two months of the year, he forecasts existing-home sales to finish 2015 at a pace of 5.30 million – the highest since 2006.
Although further expansion in existing-sales is expected next year, ongoing inventory shortages and affordability pressures from rising prices and mortgage rates will likely temper sales growth to around 3 percent (5.45 million) in 2016. Home prices are expected to slightly moderate from a 6 percent increase in 2015 to 5 percent next year.