(Washington, WA – Insurance News 360) – The National Association of Realtors announced that although pending home sales dropped slightly in November, there were increases in certain regions – the northeast and the west.
The Pending Home Sales Index decreased 0.7 percent to 101.4 in November, down from 102.1 in October. However, year-over-year contract signings dropped 7.7 percent, making this the eleventh straight month of annual decreases.The pending home sales index is a forward-looking indicator based on contract signings.
NAR’s Chief Economist, Lawrence Yun cautioned that the current sales numbers don’t fully account for other data.
“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 west crawled back lightly, but is still experiencing the biggest annual decline among the regions because of unaffordable conditions.”
Affordability challenges in the west are partly to blame for the drop in sales. Yun suggests that affordability challenges in the West are part of the blame for the drop in sales.
“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.”
Yun indicated the latest government shutdown will harm the housing market. “Unlike past government shutdowns, with this present closure, flood insurance is not available. That means that roughly 40,000 homes per month may go unsold because purchasing a home requires flood insurance in those affected areas,” Yun said. “The longer the shutdown means fewer homes sold and slower economic growth.”
November Pending Home Sales Regional Breakdown
The PHSI in the Northeast rose 2.7 percent to 95.1 in November, and is now 3.5 percent below a year ago. In the Midwest, the index fell 2.3 percent to 98.1 in November and is 7.0 percent lower than November 2017.
Pending home sales in the South fell 2.7 percent to an index of 115.7 in November, which is 7.4 percent lower than a year ago. The index in the West increased 2.8 percent in November to 87.2 and fell 12.2 percent below a year ago.
The National Association of Realtors® is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.