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Pending Home Sales Rise 0.5 Percent Amid Robust Jobs Market

Pending Home Sales Rise 0.5 Percent Amid Robust Jobs Market
(Igor Zakharevich/Dreamstime)

Wednesday, 31 January 2018 10:21 AM

Contracts to buy previously owned homes in the United States rose for the third straight month in December, bolstered by a robust job market.

The National Association of Realtors said on Wednesday its pending home sales index increased to a reading of 110.1 last month, up 0.5 percent from November.

Economists polled by Reuters had forecast pending home sales rising 0.4 percent last month.

Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.

Pending sales rose 0.5 percent in December from the same month in 2016. Pending home sales rose 4.0 percent in the South from a year earlier, while they were up 0.3 percent in the Midwest. Pending home sales fell 2.7 percent in the Northeast and 3.1 percent in the West on a year-on-year basis. 

Key Takeaways

While the increase in contract signings suggests sales of previously owned homes will pick up in the coming months, the Realtors group says low supply levels and the impact of the new tax law will constrain any gains in 2018. The legislation limits deductions for mortgage interest and property taxes, changes that are expected to affect high-cost housing markets such as the New York City region, Bloomberg reported.

Existing home sales fell in December for the first time in four months, as the market struggles with record-low supply. Even with steady job growth underpinning the housing market, rising home prices and limited options may stifle would-be buyers.

Official’s Views

“Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now,” NAR chief economist Lawrence Yun said in a statement. “Sadly, these positive indicators may not lead to a stronger sales pace. Buyers throughout the country continue to be hamstrung by record low supply levels that are pushing up prices -- especially at the lower end of the market.”

Other Details

  • Contract signings rose 2.6 percent in South, up 1.5 percent in West
  • Purchase agreements fell 5.1 percent in Northeast, 0.3 percent in Midwest
  • Economists consider pending sales a leading indicator for the housing sector because they track contract signings, which typically parallel the level of closings on existing homes within two months

(Newsmax wire services contributed to this report).

© 2019 Thomson/Reuters. All rights reserved.

   
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Economy
A measure of contract signings to buy existing U.S. homes rose in December for a third month, giving sales some momentum at the start of 2018, according to data released Wednesday by the National Association of Realtors.
pending, home, sales, housing
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2018-21-31
Wednesday, 31 January 2018 10:21 AM
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