Still struggling to find the right home in a competitive housing market, buyers aren’t flocking to close sales like they were in the spring, the National Association of Realtors (NAR) noted in its latest Pending Home Sales Index.
Pending home sales, a forward-looking indicator based on contract signings, have hit a plateau thanks to persisting supply constraints and affordability concerns, NAR said. The index inched just 0.2 percent to 107.7 from September to October.
Taking a look at the same period last year, the index is nearly 4 percent over October 2014, marking the 14th consecutive month that the index has reported year-over-year increases.
However, declines in the Midwest and South, as well as in the most competitive metro areas, contributed to modest sales growth after NAR reported strong sales for most of the year.
- The Northeast index rose 4.5 percent to 93.6 from September to October, and is now 6.8 percent above October 2014.
- The Midwest index declined 1 percent month-over-month to 103.9, but still rose 3.3 percent above October 2014.
- In the South, the index decreased 1.7 percent to 118.1 from September to October, but rose 0.3 percent above last October.
- And in the West, the index rose 1.7 percent to 106.2 from September to October, but also a notable 10.4 percent above October 2014.
The median home price in the Northeast in October was $248,900, up only 1.3 percent from a year ago. The other three major regions had price gains higher than 5 percent, NAR said.
“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,” said Lawrence Yun, NAR’s chief economist. “Areas that are heavily reliant on oil-related jobs are the exception and have already started to see some softness in sales because of declining energy prices.”
“Unless sizable supply gains occur for new and existing homes, prices and rents will continue to exceed wages into next year.” – NAR Chief Economist Lawrence Yun
Looking ahead, Yun said inventory shortages and affordability pressures from rising prices — not to mention the Fed’s expected interest-rate hike — will continue to hamper sales growth in 2016.
“Unless sizable supply gains occur for new and existing homes, prices and rents will continue to exceed wages into next year and hamstring a large pool of potential buyers trying to buy a home,” Yun said.
