WASHINGTON – The number of people signing contracts to purchase homes managed to inch up last month, thanks to unseasonably warm weather in the Northeast.
The National Association of Realtors said Thursday that its seasonally adjusted pending home sales index crept up 0.1 per cent to 106.8. Signed contracts jumped 6.1 per cent in the Northeast, while they declined in the other three major U.S. regions.
Last month was one of the warmest Decembers on record on the East Coast.
The tiny bump is consistent with many analysts’ views that home sales may rise only slightly this year after a solid increase in 2015. Rising home prices and a lack of available homes for sale are frustrating many would-be buyers.
The data is “a bit weaker than expected,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, said in a research note. “Through the volatility, trends still look upward. The latest mortgage applications data have also suggested a still-rising trend for home sales.”
The Realtors predict that sales will increase 1.5 per cent this year to 5.34 million. That would come after last year’s stronger gain of 6.5 per cent to 5.26 million, the highest level since 2006.
Solid job gains and low mortgage rates have encouraged more Americans to take the plunge and buy a home.
New home sales surged last year, up 14.5 per cent to 501,000. Still, that is below the long-run historical average of 655,000.
The inventory of available houses remains low. The number of existing homes for sale fell 3.8 per cent in December from a year ago, the Realtors said last week.
The tight supply is pushing up prices faster than average incomes, which is making it harder for many Americans to afford a purchase.
That’s kept many Americans renting. The homeownership rate has fallen to 63.8 per cent, down from a peak of 69.2 per cent in 2004.
Home prices rose 5.8 per cent in November from a year earlier, according to the Standard & Poor’s/Case-Shiller 20-city index. Nationwide, the index is nearing its pre-recession peak, and prices have fully recovered in four metro areas.
Pending sales are a barometer of future purchases. A lag of a month or two usually exists between a contract and a completed sale.