The Pending Home Sales Index, a
forward-looking indicator based on contract signings, rose 3.5 percent to 109.3
in October. The index is now at its highest reading since June (110.0).
Lawrence Yun, NAR chief economist, says pending sales in October were primarily driven higher by a big jump in the South, which saw a nice bounce back after hurricane-related disruptions in September. “Last month's solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months,” he said. “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.”
Lawrence Yun, NAR chief economist, says pending sales in October were primarily driven higher by a big jump in the South, which saw a nice bounce back after hurricane-related disruptions in September. “Last month's solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months,” he said. “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.”
According to Yun, the supply and affordability headwinds seen
most of the year have not abated this fall. Although home builders are doing
their best to ramp up production of single-family homes amidst ongoing labor
and cost challenges, overall activity still drastically lags demand. Further
exacerbating the inventory scarcity is the fact that homeowners are staying in
their homes longer. NAR's 2017 Profile
of Home Buyers and Sellers – released last month – revealed that
homeowners typically stayed in their home for 10 years before selling (an
all-time survey high). Prior to 2009, sellers consistently lived in their home
for a median of six years before selling.
“Existing inventory has decreased every month on an annual basis
for 29 consecutive months, and the number of homes for sale at the end of
October was the lowest for the month since 19991,” said Yun. “Until
new home construction climbs even higher and more investors and homeowners put
their home on the market, sales will continue to severely trail underlying
demand.”
With two months of data remaining for the year, Yun forecasts
for existing-home sales to finish at around 5.52 million, which is an increase
of 1.3 percent from 2016 (5.45 million). The national median existing-home
price this year is expected to increase around 6 percent. In 2016, existing
sales increased 3.8 percent and prices rose 5.1 percent.
Source: National Association of Realtors
Source: National Association of Realtors
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