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US pending home sales post biggest decline since 2010
[WASHINGTON] Contract signings to purchase US previously owned homes unexpectedly slumped in December, depressed by fewer listings of properties and representing a blemish after a recent spate of positive housing-market news.
An index of pending home sales decreased 4.9 per cent from the month prior, the largest decline since May 2010, according to data out Wednesday from the National Association of Realtors. The median forecast of economists surveyed by Bloomberg called for a 0.5 per cent gain. Treasury yields and stocks declined after the report. Compared with December 2018, however, contract signings were up 6.8 per cent on an unadjusted basis.
The monthly drop indicates housing demand is being thwarted by lean inventory that's driving up asking prices and keeping prospective buyers from taking advantage of lower mortgage rates. A strong job market and income growth have also helped underpin home sales.
A report earlier today showed a gauge of loan applications to buy homes increased to an 11-year high in the week ended Jan 24, suggesting firmer home sales at the start of 2020.
Pending home sales are often looked to as a leading indicator of existing-home purchases and a measure of the health of the housing market in the coming months.
"Due to the shortage of affordable homes, home sales growth will only rise by around 3%," Lawrence Yun, chief economist at the NAR, said in a statement, adding that mortgage rates will probably hold below 4% for most of the year. "Home prices and even rents are increasing too rapidly, and more inventory would help correct the problem and slow price gains."