Pending Homes Sales Decline for Third Straight Month – But Remain 16.4% Above 2019 Levels

The National Association of Realtors® (NAR) has reported their Pending Homes Sales Index (PHSI), which is based month-over-month contract activity, that is signed real estate contracts, not actual closings, for existing single-family homes, condos, and co-ops, declined for the third straight month in a row, declining -2.6% in November to a reading of 125.7. An index of 100 is equal to the level of contract activity in 2001. Year-over-year contract signings rose 16.4%. In remarks prepared for the release of the PHSI, Lawrence Yun, NAR’s chief economist said, “The latest monthly decline is largely due to the shortage of inventory and fast-rising home prices. It is important to keep in mind that the current sales and prices are far stronger than a year ago. 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,” Yun has predicted a favorable outlook for the housing market in the coming year. According to his 2021 projects, there will be a slight upward rise in mortgage rates to around 3% from the current +/- 2.7% rate. Existing home sales are anticipated to increase roughly 10% and new home sales by 20% in 2021.