Pending Home Sales See Slight November Gains

Pending Home Sales See Slight November Gains Pending home sales pulled off a second straight gain in November, but just barely. The National Association of Realtors® (NAR) said its Pending Home Sales Index (PHSI), which is based on contracts for existing home purchases, rose 0.2 per percent to 109.5 compared to the October level of 109.3. The November reading was the highest since June, and was higher year-over-year for the first time since then, beating the November 2016 level by 0.8 percent. The gain was less than the 0.5 percent increase analysts polled by Econoday had expected, although their predictions covered a lot of territory. The range varied from -1.0 to 5.0 percent. Lawrence Yun, NAR chief economist, said, "The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear. However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust. Realtors say many would-be buyers from earlier this year, stifled by tight supply and higher prices, are still trying to buy a home." NAR also noted that 2018 existing-home sales and price growth are expected to slow, primarily because of the altered tax benefits of homeownership affecting some high-cost areas. One of the biggest questions heading into the new year, according to Yun, is if the depressed levels of available supply can improve enough to slow price growth and make buying a home more affordable. While last month's significant boost in existing sales was noteworthy, it did come with some concerns. Sales prices were up 5.8 percent - more than double wage growth and the 3.4-month supply of homes on the market was the lowest since NAR began tracking that statistic in 1999. "The strengthening economy, and expectation that more millennials will want to buy, serve as promising signs for solid homebuying demand next year," Yun said, "while also putting additional pressure on inventory levels and affordability. Sales do have room for growth in most areas, but nationally, overall activity could be slightly negative. Markets with high home prices and property taxes will likely feel some impact from the reduced tax benefits of owning a home" These include a lower cap on the mortgage interest deduction and a new cap on the amount of property tax that can be deducted