Pending home sales, or signed contracts, rebounded a bit in December, despite rising mortgage rates and “alarmingly low” inventory levels, according to an update out today from the National Association of Realtors (NAR).
“Pending sales rebounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract,” says Lawrence Yun, NAR chief economist.
Those tight supplies are keeping first-time home buyers on the sidelines. Meantime, a large portion of overall supply right now is at the upper end of the market.
“The dismal number of listings in the affordable price range is squeezing prospective first-time buyers the most,” said Yun. “As a result, young households are missing out on the wealth gains most homeowners have accrued from the 41 percent cumulative rise in existing home prices since 2011.”
Last month, sales were up around 10 percent, compared to December 2015 for homes sold at or above $250,000.
Homes sold between $100,000 and $250,000 only increased 2.3 percent. Meanwhile, sales of homes under $100,000 were down 11.6 percent compared to a year ago.
Existing-home sales are forecast to hit 5.54 million this year, an increase of 1.7 percent from 2016, which was the best year of sales since 2006. The national median existing-home price in 2017 is expected to increase around 4 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.2 percent.
Pending home sales picked up in December as solid increases in the South and West offset weakening activity in the Northeast and Midwest. The NAR’s Pending Home Sales Index, an indicator based on contract signings, increased 1.6 percent to 109.0 in December, from 107.3 in November. With last month’s uptick in activity, the index is now 0.3 percent above last December (108.7).