Pending home sales have shown an increase in December per a report from the National Association of Realtors. The Pending Home Sales Index, the indicator based off of signed contracts went up by 1.6% to 109 in the month of December from 107.3 in November. Considering this activity the index is now 0.3% higher than December of 2015.
Chief economist, Lawrence Yun has shared that the contract activity has ranged across the United States in December but finished on a higher note as the year came to an end. “Pending sales rebounded (in December) as enough buyers fended off rising mortgage rates and alarmingly low inventory levels1 to sign a contract,” he said. “The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs. Sales will struggle to build on last year’s strong pace if inventory conditions don’t improve.”
Existing home sales are forecasted to be at approximately 5.54 million for 2017 which is an increase of 1.7% over last year. Last year was the best year of sales in a decade since 2006. The median home price for 2017 is anticipated to increase by 4%. By comparison, 2016 had existing home sales rise by 3.8% and prices inch up by 5.2%. Additionally, Yun forecasts housing starts to increase by 7.9% to 1.26 million units.
“Especially if construction-related regulations are relaxed, all eyes will be on the homebuilding industry this year to see if they can finally start making up lost ground on the severe housing shortages impacting much of the country,” added Yun.
In several markets it is the norm for sales to slow during the holidays and winter season. Inventory can also be more challenging with sellers removing their homes from the active market and relist as spring approaches. Overall, the predictions for 2017 are optimistic as we dive further into the year.