WASHINGTON – Fewer people signed contracts to purchase homes in November, as the real estate market appears to have cooled after sales gains for much of 2015.
The National Association of Realtors said Wednesday that its seasonally adjusted pending home sales index fell 0.9 per cent to 106.9 last month. It was the lowest reading in 10 months. Still, the index has risen 2.7 per cent from a year ago.
Steady hiring and low mortgage rates lifted home sales for much of this year. But the pace of buying slowed after the end of the summer, with inventories tight and home values rising faster than incomes. Signed contracts last month fell in the Northeast and West market, while rising slightly in the Midwest and South.
Pending sales are a barometer of future purchases. A lag of a month or two usually exists between a contract and a completed sale.
The decline in contracts occurred as finalized sales are slowing.
The Realtors said last week that sales of existing homes tumbled 10.5 per cent to a seasonally adjusted annual rate of 4.76 million. The decrease largely stemmed from the introduction new mortgage rules that increased the amount of time needed to complete a sale.
Yet home sales are on track to rise roughly 5 per cent for the entire year to 5.25 million. That figure would be 25 per cent below the bubble-era sales of 7.1 million in 2005.
The limited supplies are pushing up prices as buyers are chasing a narrow inventory of properties. The number of listings on the market has dropped 1.9 per cent from a year ago, according to the Realtors. The tight inventory has fueled sales price increases of 6 per cent this year to a median of $220,700 — with prices rising at more than double the pace of average hourly earnings.