Pending home sales continued to fall in the US at end of 2018, latest index shows
Pending home sales declined as a whole in the United States in December, but for the second month in a row the Western region experienced a slight increase, according to the latest index.
Overall sales, based on contract signings, fell by 2.2% in the last month of 2018 and compared with December 2017 they were down by 9.8%, and have now fallen for 12 months in a row, the data from the National Association of Realtors shows.
There are several reasons for the decline in pending sales, according to Lawrence Yun, NAR chief economist. He explained that the stock market correction has hurt consumer confidence, record high home prices have cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December.
The figures also show that while the Western region saw a slight month on month increase in December, all four major regions experienced a decline year on year, with the South sustaining the largest decrease.
A breakdown of the figures show that pending sales increased by 2% in the North East but are still 2.5% below a year ago while in the Midwest they fell 0.6% and are 7.2% lower than December 2017.
Pending home sales in the South fell 5%, which is 13.5% lower than a year ago and in the West they increased 1.7% in December but are still 10.8% below a year ago.
Yun pointed out that so far, the partial Government shutdown has not caused any obvious damage to home sales. However, he believes that if another government shutdown takes place, it will lead to fewer homes being sold.
But he also pointed out that more mortgage options will become available for consumers. ‘Some home transactions were delayed, but we now expect those sales to go forward,’ he said.
Despite the low home sales in December, Yun is confident that the housing market will see improvement in 2019. ‘The longer term growth potential is high. The Federal Reserve announced a change in its stance on monetary policy. Rather than four rate hikes, there will likely be only one increase or even no increase at all. This has already spurred a noticeable fall in the 30 year, fixed rate for mortgages. As a result, the forecast for home transactions has greatly improved,’ he added.