Pending home sales slightly improved in November and are above year-over-year levels for the third straight month, according to the National Association of Realtors (NAR). All major regions except for the Midwest experienced a slight gain in activity in November.
The Pending Home Sales Index (PHSI), NAR’s forward-looking indicator based on contract signings, increased 0.8% to 104.8 in November from a slightly downwardly revised 104 in October and is now 4.1% above November 2013 (100.7) – the highest year-over-year gain since August 2013 (5.6%).
Lawrence Yun, NAR chief economist, said signed contracts inched forward in November and have been fairly stable but haven't broken out even as the economy picked up steam this spring.
"The consistent economic growth and steady hiring we've seen the second half of this year is giving buyers enough assurance to consider purchasing a home before year's end," he said. "With rents now rising at a seven-year high, historically low rates and moderating price growth are likely to entice more buyers to enter the market in upcoming months."
Yun also noted that falling gas prices will likely boost consumer confidence and allow prospective buyers the opportunity to save additional money for a down payment. NAR's 2014 Profile of Home Buyers and Sellers (released in November) found that the median down payment ranged from 6% for first-time buyers to 13% for repeat buyers.
"There's still misperception out there that a much higher down payment is needed, while that's not the reality," added Yun.
The PHSI in the Northeast rose 1.4% to 89.1 in November, and is now 7% above a year ago. In the Midwest the index decreased 0.4% to 100.0 in November, and is now 0.5 % below November 2013.
Pending home sales in the South rose 1.3% to an index of 119.7 in November, and are 5.1% above last November. The index in the West increased 0.4% in November to 98.5, and is now 4.9% above a year ago.
Total existing-homes sales this year are expected to be around 4.94 million, a decline of 3% from last year (5.09 million), but are then forecasted to rise to 5.30 million in 2015. The national median existing-home price for all of this year will be close to $208,000, up 5.6% from 2013, and is likely to moderate to a pace between 4 and 5% next year. Existing-home prices rose 11.4% in 2013.
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