Home Sales Break Losing Streak, But Don’t Expect Much Growth in 2014
After declining for five consecutive months and reaching its worst level of the year, pending home sales in the United States managed to edge higher in November. However, sales are still below their level seen a year earlier.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 0.2 percent to 101.7 in November from a downwardly revised 101.5 in October and the worst reading since December 2012, according to the latest report from National Association of Realtors. On average, economists expected sales to rise about 1 percent last month.
Despite the weaker-than-expected results, NAR Chief Economist Lawrence Yun believes the market is flattening. “We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014,” he explained. “Although the final months of 2013 are finishing on a soft note, the year as a whole will end with the best sales total in seven years.”
Monthly increases in the South and West offset declines in the Northeast and Midwest, but pending home sales dropped below their year-ago level for the third consecutive month. Yun said the market still favors buyers in most parts of the country, but a rebound in mortgage rates and home prices should warrant a more modest growth in values next year.
The Pending Home Sales Index increased 2.3 percent in the South to 116.1 in November, and gained 1.8 percent in the West to 95. On the other hand, sales fell 2.7 percent in the Northeast, and dropped 3.1 percent in the Midwest.
The National Association of Realtors expects total existing-home sales this year to be 10 percent higher than 2012, totaling more than 5.1 million units. In 2014, sales are “likely” to hold even. Meanwhile, the national median existing-home price is expected to increase nearly 12 percent for 2013 from last year, but slow to a more reasonable 5 percent to 5.5 percent gain in 2014, and grow another 4 percent in 2015.
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