Contracts for the sale of previously owned homes in the United States jumped in November, largely driven by a bigger jump in new contracts. According to the National Association of Realtors, the pending home sales index is up 1.2 percent—to 108.5—based on contracts signed in November.
This marks the third rise in US pending home sales in four months.
Most of these new contracts appear to be swinging upward in the Western region of the country, which were up 5.5 percent from the month of October. The Midwest also saw an increase but sales were much lower in both the South and Northeast.
Pending home sales contracts are typically viewed as a “forward-looking” indicator of housing market health as they signal homes that will likely be sold within the next two months. Compared with the same metric from a year ago, pending sales are up 7.4 percent; but it should also be noted that these numbers are a turnaround from a particularly weak season last year.
National Association of Realtors chief economist Lawrence Yun explains, “Despite the insufficient level of inventory, pending home contracts still increased in November. The favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”
In October, Yun had originally said this lack of inventory facilitated a drop in pending sales. He argues that buyers were experiencing some difficulty when looking for available homes on the market.
Now, most economist do expect that home-building activity will surge again next year, but even then it is not likely going to be enough to fully meed the expected demand. Of course, that means home prices will continue to increase at a steady—but still somewhat slow—pace.