U.S. Pending Home Sales Fall as Elevated Prices Slow Momentum
(Bloomberg) -- A gauge of U.S. pending home sales fell for the fourth consecutive month in December, reflecting further weakness in the Midwest as rising prices slowed momentum in the housing market.
The National Association of Realtors’ index of pending home sales decreased 0.3% to 125.5 after a revised 2.5% decline in November, according to data released Friday. The median estimate in a Bloomberg survey of economists called for a retreat of 0.5% in December.
The decline underscores the difficulties of further upward momentum in the housing market as the lack of available properties drives up asking prices and restrains demand.
Contract signings are still up 22.8% from a year earlier on an unadjusted basis, highlighting the strides residential real estate has made amid record-low mortgage rates and buyer preferences for larger homes that double as office space.
“There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings,” Lawrence Yun, chief economist at the NAR, said in a statement. “This elevated demand without a significant boost in supply has caused home prices to increase and we can expect further upward pressure on prices for the foreseeable future.”
By region, pending home sales declined 3.6% in the Midwest, the fourth straight decrease. In the largest U.S. region -- the South -- contract signings edged up 0.1%. Pending sales were unchanged in the West and rose in the Northeast.
The housing market is one of the economy’s bright spots. In the fourth quarter, residential investment increased at a 33.5% annualized rate after a 63% pace, according to the government’s latest reading on gross domestic product.
©2021 Bloomberg L.P.