WASHINGTON (AP) — Americans signed more contracts to purchase homes in November, a rebound from the previous month, indicating that the housing market is still strong.
The National Association of Realtors said Monday that its pending home sales index, which measures the numbers of purchase contracts signed, rose 1.2% last month, to 108.5. The trade association said that contract signings measured year over year are up a robust 7.4%.
“Despite the insufficient level of inventory, pending home contracts still increased in November,” said Lawrence Yun, NAR’s chief economist, noting that housing inventory has been in decline for six straight months dating back to June 2019. “The favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”
Mortgage rates have fallen sharply in the past year in large part due to the Federal Reserve lowering its benchmark short-term interest rate. Lower rates have somewhat helped to offset rising home prices across the U.S., but affordability remains a persistent challenge for would-be buyers. The median sales price has climbed 5.4% from a year ago to $257,400, outpacing wage growth.
A lack of supply has also been a hurdle for homeshoppers. The number of properties for sale in November dwindled 5.7% from a year ago, to 1.64 million units, according to a report earlier this month.
Mortgage buyer Freddie Mac said last week that the average rate for a 30-year fixed-rate mortgage remained at a historically low 3.74%, compared to 4.55% a year ago. Most economists expect rates to remain low through 2020, which should support more buying.
The regional indices had mixed results in November. The Northeast PHSI slid 0.1% to 96.3 in November, 2.6% higher than a year ago. In the Midwest, the index rose 1.0% to 102.5 last month, 5.0% higher than in November 2018.
Pending home sales in the South decreased 0.2% to an index of 125.0 in November, a 7.7% increase from last November. The index in the West grew 5.5% in November 2019 to 98.4, an increase of 14.0% from a year ago.
– Additional reporting by FWBP Staff