Its latest Pending Home Sales Index, a forward looking indicator based on contract signings, fell 4.3% to 101.7 in December from 106.3 in November but is 6.9% higher than December 2011.
Lawrence Yun, NAR chief economist, said there is an underlying upward trend but it is uneven. ‘The supply limitation appears to be the main factor holding back contract signings in the past month. Still, contract activity has risen for 20 straight months on a year on year basis,’ he pointed out.
‘Buyer interest remains solid, as evidenced by a separate realtor survey which shows that buyer foot traffic is easily outpacing seller traffic,’ he added.
Yun also pointed out that shortages of available inventory are limiting sales in some areas. ‘Supplies of homes costing less than $100,000 are tight in much of the country, especially in the West, so first-time buyers have fewer options. We expect a seasonal rise of inventory in the spring to help, but a seller's market may be developing. Much of the West is already a seller's market for homes priced under a million dollars, but conditions are much more balanced in the Northeast,’ he explained.
Even with tighter inventory, a pent up demand and favourable affordability conditions bode well for the market and Yun added that he expects existing home sales to increase another 9% in 2013, following a 9% rise in 2012.
The PHSI in the Northeast fell 5.4% to 78.8 in December but is 8.4% higher than December 2011. In the Midwest the index rose 0.9% to 104.8 in December and is 14.4% above a year ago.
Pending home sales in the South declined 4.5% to an index of 111.5 in December but are 10.1% higher than December 2011. In the West the index fell 8.2% in December to 101.0 and is 5.3% below a year ago.
