Reversing course from October’s decline, the National Association of Realtors indicates the nation’s pending home sales increased in November.
During the month, the Pending Home Sales Index, a forward-looking indicator based on contract signings, increased to 108.5, rising from October’s 106.7.
According to NAR, contract signings increased by 1.2% from last month’s decline and jumped by 7.4% from 2018.
The index revealed that activity in the nation’s four major regions was up compared to one year ago, with the Midwest, Northeast, and South experiencing marginal variances and the West reporting notable growth.
“Despite the insufficient level of inventory, pending home contracts still increased in November,” Lawrence Yun, NAR’s chief economist said. “The favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”
The Department of Housing and Urban Development and the Department of Commerce reported housing starts grew by 3.2% in November to a seasonally adjusted annual rate of 1.365 million.
Although this increase was good news for the housing market, November’s housing starts were still short by 135,000, Yun said. Compared to the long-term average, the market is still in need of 5 to 6 million homes to fully end the housing shortage, he said.
The good news is, construction spending increased by 0.8% in November, and more homebuilders indicated they expected sales conditions to improve over the next six months.
“Builder confidence levels are high, so we just need housing supply to match and more home construction to take place in the coming year,” Yun said.
These are November’s PHSI changes for each region:
- Northeast: decreased by 0.1% to 96.3 but is 2.6% higher than November 2018
- Midwest: Increased by 1% to 102.5 and is 5% higher than November 2018
- South: Decreased by 0.2% to 125 but is 7.7% higher than November 2018
- West: increased by 5.5% to 98.41 and is 14% higher than November 2018
