Despite falling back by 0.3% on a month-over-month basis, the latest Pending Home Sales Index is still the highest recorded for the month of December at 125.5, according to the National Association of Realtors. These results mark the fourth consecutive month of month-over-month decreases.
NAR attributes the decline in pending home sales to a 3.6% drop in contract signings in the Midwest region on a month-to-month basis. Nationally, contract signings rose 21.4% year over year, and all regions saw a double-digit increase in signings YOY.
According to Realtor.com’s housing market recovery index, Portland, Oregon; Las Vegas; Denver; Los Angeles; and Boston have experienced the “most significant” housing market recovery as of Jan. 16.
“Pending home sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale,” says Lawrence Yun, NAR’s chief economist. “There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings. This elevated demand without a significant boost in supply has caused home prices to increase, and we can expect further upward pressure on prices for the foreseeable future.”
If rates remain low, Yun projects that existing home sales are likely to reach 6.49 million in 2021, or a 15% increase from 5.64 million in 2020. “There will also be slower home price appreciation, likely 6.6%, as increased confidence from home builders will ultimately lead to an increase in housing starts.”
