Pending home sales climb for a third time in four months
Contract signings to purchase previously owned homes increased in November for the third time in four months, consistent with steady progress in the residential real estate market.
An index of pending home sales climbed 1.2% from the previous month, missing the median forecast in a Bloomberg survey of economists, data out Monday from the National Association of Realtors showed. Underscoring the market's turnaround from last year's weakness, contract signings jumped 5.6% from November 2018 on an unadjusted basis.
The gain in signings shows the housing market remains supported by low borrowing costs, improving income growth and steady job creation. A stable tone in residential real estate through early winter may foreshadow a more robust spring selling season that could continue to add to economic growth.
The report follows other recent readings on the housing industry that have signaled conditions continue to improve after the 2018 slowdown. Federal Reserve interest-rate cuts have helped push mortgage rates down while strong labor-market readings have buoyed consumers and underpinned household sentiment.
At the same time, buyers face a lean inventory of available properties that's keeping asking prices elevated and hampering sales, particularly at lower price points.
Pending home sales are often looked to as a leading indicator of existing-home purchases and a measure of the health of the housing market in the coming months.
"Favorable conditions are expected throughout 2020," though supplies still aren't sufficient to meet healthy demand, Lawrence Yun, NAR's chief economist, said in a statement. "Builder confidence levels are high, so we just need housing supply to match and more home construction to take place in the coming year."
The increase was led by a rebound in the West, which climbed 5.5% from the prior month. Signings were up 1% in the Midwest and were down in the South and Northeast.
Forecasts for monthly pending home sales in the Bloomberg survey ranged from no change to a 2.5% increase. The median called for a 1.4% month-over-month gain.