Limited Supplies Slow Pending Home Sales, But Buyer Interest 'Solid'

Limited Supplies Slow Pending Home Sales, But Buyer Interest 'Solid' Pending home sales, a measure of contracts but not closings, declined in December as inventories continued to tighten, according to the closely-watched index from the National Association of Realtors.
But pending sales stayed above year-ago levels in December for 20 consecutive months.
The organization projects that existing-home sales will increase another 9 percent in 2013, following a 9 percent rise in 2012.
The index fell 4.3 percent to 101.7 in December, from 106.3 in November but was 6.9 percent higher than December 2011 when it was 95.1.
“The supply limitation appears to be the main factor holding back contract signings in the past month,” said Lawrence Yun, NAR chief economist. “Still, contract activity has risen for 20 straight months on a year-over-year basis.”
Buyer interest “remains solid” as a separate Realtor survey shows that buyer foot traffic is easily outpacing seller traffic, Yun said.
But shortages of available inventory are limiting sales in some areas.
“Supplies of homes costing less than $100,000 are tight in much of the country, especially in the West, so first-time buyers have fewer options,” Yun said.
Realtors expect a seasonal increase in inventories in the spring to help, but a seller’s market may be developing.
Much of the West is already a seller’s market for homes priced under a million dollars, but conditions are much more balanced in the Northeast, Yun said.
The Pending Home Sales Index in the Northeast fell 5.4 percent to 78.8 in December, but is 8.4 percent higher than December 2011.
In the Midwest, the index rose 0.9 percent to 104.8 in December and is 14.4 percent above a year ago.
Pending home sales in the South declined 4.5 percent to an index of 111.5 in December, but are 10.1 percent higher December 2011.
In the West, the index fell 8.2 percent in December to 101.0 and is 5.3 percent below a year ago.

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