Pending Home Sales Finish 2017 on Up Note

Pending home sales rose for the third consecutive month in December to their highest level in nearly a year, the National Association of Realtors said yesterday.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose by 0.5 percent to 110.1 in December from an upwardly revised 109.6 in November. The index improved by 0.5 percent from a year ago.

Pending home sales in the South rose by 2.6 percent to 126.9 in December and are now 4.0 percent higher than last December. Pending sales in the West rose by 1.5 percent in to 101.7 but fell by 3.1 percent from a year ago. In the Northeast, pending sales fell by 5.1 percent to 93.9 in December and by 2.7 percent from a year ago. In the Midwest the index fell by 0.3 percent to 105.0 but improved by 0.3 percent from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said rising pending sales mean existing sales and closings will have “solid momentum” at the start of 2018.

“Rising mortgage rates and expectations of further rate hikes may have pulled some buyers forward,” Vitner said. “Price appreciation has also shown no signs of slowing down behind supply issues.”

“Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018,” said NAR Chief Economist Lawrence Yun. “Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now.”

But Yun cautioned these positive indicators may not lead to a stronger sales pace. “Buyers throughout the country continue to be hamstrung by record low supply levels that are pushing up prices, especially at the lower end of the market,” he said.