(RTTNews.com) - With decreases in the South and Midwest more than offsetting increases in the Northeast and West, the National Association of Realtors released a report on Friday showing a continued drop in pending home sales in the month of November.
NAR said its pending home sales index fell by 0.7 percent to 101.4 in November after plunging by 2.6 percent to 102.1 in October. The continued decline in pending home sales matched economist estimates.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Compared to the same month a year ago, pending home sales slumped by 7.7 percent, reflecting the eleventh straight month of annual decreases.
"The latest decline in contract signings implies more short-term pullback in the housing sector and does not yet capture the impact of recent favorable conditions of mortgage rates," said NAR chief economist Lawrence Yun.
While pending contracts have fallen to their lowest level since 2014, Yun said there is no reason to be overly concerned and predicts solid growth potential for the long-term.
The continued decrease in pending home sales in November came as pending sales in the South and Midwest tumbled by 2.7 percent and 2.3 percent, respectively.
On the other hand, the report said pending home sales surged up by 2.7 percent in the Northeast and by 2.8 percent in the West.
Yun predicted the partial government shutdown will harm the housing market, as flood insurance is not available in the current shutdown.
"That means that roughly 40,000 homes per month may go unsold because purchasing a home requires flood insurance in those affected areas," Yun said. "The longer the shutdown means fewer homes sold and slower economic growth."
However, Yun believes there are good longer-term prospects for home sales, noting home sales are clearly underperforming job growth compared to the turn of the century.
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