Tight Supply Limits Pending Home Sales
- Peter KingJanuary 28, 2013 - MortgageLoan.com
Pending home sales slowed in December, as limited inventories of low-priced homes limited choices for first-time buyers, the National Association of Realtors (NAR) reported today.
Signed contracts for homes purchases were down a seasonally adjusted 4.3 percent for the month, according to the NAR’s index of pending home sales, but still showed an annual increase of 6.9 percent compared to December 2011. That marks 20 consecutive months in which pending home sales have increased on an annual basis.
Shortages of homes under $100,000
Edward Yun, NAR chief economist, said the main factor behind December’s monthly decline is a shortage of available homes in many 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. "We expect a seasonal rise of inventory in the spring to help, but a seller's market may be developing.”
He said many parts of the western region of the country are currently a seller’s market for all but the most expensive homes, while the Northeast is seeing a closer balance between supply and demand.
A slowing rate of foreclosures has reduced the number of bank-owned homes coming on the market, while many homeowners who otherwise might be looking to sell are unable to because they are underwater on their mortgages.
Yun said the NAR is predicting a 9 percent increase in home sales in 2013, matching the 2012 rate of increases.
New home sales also down
News of the slowing pace of pending home sales comes on the heels of Friday’s announcement that the rate of new home sales also fell in December, dropping a seasonally adjusted 7.8 percent from the previous month, according to figures from the Census Bureau and Department of Housing and Urban Development.
December sales were at an annual rate of 369,000 units, an 8.8 percent annual increase over the December 2011 rate. The agencies estimate that a total of 367,000 new homes were sold in 2012, a 19.9 percent increase over the 306,000 reported for 2011.
First published at: http://www.mortgageloan.com/tight-supply-limits-pending-home-sales-9347
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