US pending home sales rise modestly in October

30 Nov 2015 | Author: | No comments yet »

NAR: Pending homes sales barely inch up as ‘affordability concerns remain heightened’.

Pending home sales reversed two months of falls with a slight gain in October, as tight supplies keep a damper on home buying, the National Association of Realtors reported Monday. The Realtors reported last week that finalized sales have risen 3.9 percent from a year ago, even as buyers have fewer choices because the number of listings on the market has dropped 4.5 percent.Contract signings to purchase previously owned U.S. homes rose less than forecast in October after declining in the prior two months, showing residential real estate is cooling heading into the quieter selling season. Buyer demand continues to be supported by low interest rates, but tight supplies are keeping prices for homes high and causing buyers to baulk, said NAR chief economist Lawrence Yun. These contracts are a forward-looking indicator of closed sales in November and December. “Contract signings in October made the most strides in the Northeast, which hasn’t seen much of the drastic price appreciation and supply constraints that are occurring in other parts of the country,” said Lawrence Yun, the Realtors’ chief economist. “In the most competitive metro areas — particularly those in the South and West — affordability concerns remain heightened as low inventory continues to drive up prices.” After a busy spring, home sales have trended down slightly, but strong job growth in some markets has kept the overall pace improved from last year.

However, he added that improving job markets and a strengthening U.S. economy will result in stronger demand from prospective buyers in the coming months and in 2016. Purchase contracts rose 2.1 percent in the 12 months ended in October on an unadjusted basis after a 3.2 percent annual gain in September, the NAR report showed. Homebuilder confidence unexpectedly fell three points in November to a score of 62, housing starts slipped 11% to a seasonally adjusted annual pace of 1.06 million units — the lowest rate since March— and existing-home sales dropped 3.4% in October. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic, according to the NAR. Mortgage interest rates have been rising for the past several weeks and could see bigger gains going into 2016 if the Federal Reserve raises its long-term rates in December.

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