December Pending Home Sales Slide 3.8%

Pending home sales fell in December, marking two straight months of declines, the National Association of Realtors reported Thursday. All four regions posted both month-over-month and year-over-year drops in contract activity.

The Pending Home Sales Index (, a forward-looking indicator of home sales based on contract signings, fell 3.8% to 117.7 in December. Year-over-year, transactions fell by 6.9%.

Pending sales in the Northeast fell by 1.2% to 98.2 in December and by 10.5% from a ear ago. In the Midwest, the index dropped by 3.7% to 112.8 in December and by 1.2% from. In the south, pending sales fell by 1.8% to 145.2 in December and 3.9% from a year ago. In the West, sales fell by 10% in December to 95.0 and fell by 16.2% from a year ago.

“A diminished housing supply offered consumers very few options,” said Lawrence Yun, NAR chief economist. “Mortgage rates have climbed steadily the last several weeks, which unfortunately will ultimately push aside marginal buyers.”

However, even with December’s slowdown in transactions, Yun said last year was an “overall great period” for housing in terms of sales and price appreciation. “The market will likely endure a minor reduction in sales as mortgage rates continue to edge higher,” he said.

“Limited inventory and declining affordability may be holding back sales activity,” said Odeta Kushi, Deputy Chief Economist with First American Financial Corp., Santa Ana, Calif. “It’s hard to buy what’s not for sale. Marginal buyers are also being priced out as rates rise alongside double-digit price growth. Buyers are eager to find a home before rates rise further, yet finding something to buy in their price range is a challenge. As buyers on the margin pull back from the market, price growth will moderate. However, the supply-demand imbalance assures that growth will remain positive.”