December Pending Home Sales Down 5%

Pending home sales fell in December, falling back after increasing slightly in November, the National Association of Realtors reported yesterday, as all four major regions reported a drop in month-over-month contract activity.

The NAR Pending Home Sales Index, a forward-looking indicator based on contract signings, fell by 4.9% to 103.2 in December. Year-over-year, however, contract signings increased by 4.6%.

All four regional indices fell in December. The Northeast slipped by 4.0% to 92.4 in December and was 0.1% lower than a year ago. In the Midwest, the index dropped by 3.6% to 98.8 December but was 1.3% higher from a year ago.

Pending home sales in the South decreased by 5.5% to 118.1 in December, but jumped by 7.4% from a year ago. In the West, the index fell by 5.4% in December to 93.1, but increased by 7.0% from a year ago.

“Mortgage rates are expected to hold under 4% for most of 2020, while net job creation will likely exceed two million,” said NAR Chief Economist Lawrence Yun. He noted while these factors are promising for the housing market, low inventory remains a significant longer-term concern.

“Due to the shortage of affordable homes, home sales growth will only rise by around 3%,” Yun said. “Still, national median home price growth is in no danger of falling due to inventory shortages and will rise by 4%. The new home construction market also looks brighter, with housing starts and new home sales set to rise 6% and 10%, respectively.”

Pointing to data from active listings at®, Yun says the markets where listing prices are around $250,000 – an affordable price point in most markets nationally – are drawing some of the most significant buyer attention, including Fort Wayne, Ind., Burlington, N.C., Topeka, Kan., Pueblo, Colo., and Columbus, Ohio.

“The state of housing in 2020 will depend on whether home builders bring more affordable homes to the market,” Yun said. “Home prices and even rents are increasing too rapidly, and more inventory would help correct the problem and slow price gains.”