US pending home sales unexpectedly decline on low supply

Published Wed, Dec 29, 2021 · 11:52 PM

[WASHINGTON] A gauge of US pending home sales unexpectedly fell in November as high prices and low inventory restrict home buying.

The National Association of Realtors' (NAR) index of pending home sales decreased 2.2 per cent from a month earlier to 122.4, according to data released Wednesday (Dec 29), more than all estimates in a Bloomberg survey. The figures suggest the housing market is easing toward the end of a year that's been buoyed by strong demand and low borrowing costs. However, high prices and limited inventory are weighing on activity.

"There was less pending home-sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices," Lawrence Yun, NAR's chief economist, said in a statement. Contract signings retreated across all 4 regions from the prior month. The Mid-west posted the largest decline, falling 6.3 per cent, the most since February.

Compared with a year earlier, contract signings were down 2.7 per cent on an unadjusted basis.

A separate report last week showed that sales of previously owned US homes increased for a third straight month in November. The pending home-sales data are often seen as a leading indicator of existing home sales given they typically go under contract a month or 2 before they're sold.

Unlike existing home sales, which are calculated when a contract closes, the index of pending home sales is based on contract signings. "Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply-chain disruptions and labor shortages this year," Yun said.