Pending sales of US existing homes decline for a third month

Washington

A GAUGE of US pending home sales fell for the third consecutive month in November, suggesting higher prices and limited inventory are slowing momentum in the housing market despite record-low borrowing costs.

The National Association of Realtors' (NAR) index of contract signings to purchase previously owned homes declined 2.6 per cent from the prior month to 125.7.

Compared with a year earlier, pending sales were up 16 per cent on an unadjusted basis.

The drop in the index from the prior month shows more tempered activity in the housing market as prices continue to climb amid lean inventory.

Still, the pending sales gauge remains well above pre-pandemic levels, indicating still-elevated demand as buyers seek more space.

"The latest monthly decline is largely due to the shortage of inventory and fast-rising home prices," Lawrence Yun, NAR's chief economist, said in a statement.

"The market is incredibly swift this winter with the listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates."

A separate report last week showed existing home sales, calculated when a contract is closed, fell in November for the first time in six months, underscoring the challenges for housing market growth as surging prices threaten affordability.

Pending home sales declined in all four major US regions. The gauge of contract signings in the West dropped 4.7 per cent to a four-month low. In the Midwest, pending sales declined 3.1 per cent, while in the South they fell 1.1 per cent. BLOOMBERG