U.S. pending home sales declined in October but are above year-over-year levels for the second straight month, according to the National Association of Realtors (NAR).
NAR’s Pending Home Sales Index dipped 1.1 percent to 104.1 in October from an upwardly-revised 105.3 in September, but is 2.2 percent higher than October 2013 (101.9). The index is above 100 – considered an average level of contract activity – for the sixth consecutive month.
Lawrence Yun, NAR chief economist, said that despite October’s modest decline, contract signings have remained at a healthy pace for six straight months.
"In addition to low interest rates, buyers entering the market this autumn are being lured by the increase in homes for sale and less competition from investors paying in cash," Yun said in a statement. "Demand is holding steady but would be more robust if it weren’t for lagging wage growth and tight credit conditions that continue to hamper those individuals looking for relief from rising rents."
The median existing-home price for all housing types in October was $208,300, which is 5.5 percent above October 2013. Monthly median price growth has averaged 5.8 percent in 2014 (through October) after averaging 11.5 percent last year.
"The increase in median prices for existing homes has leveled off, representing a healthier pace that has kept affordability in check for buyers in many parts of the country, while giving more previously stuck homeowners with little or no equity the ability to sell," Yun added.
Yun said evidence of rising home prices allowing more willing homeowners the ability to sell can be found in NAR’s annual survey, released earlier this month, which revealed that the typical seller over the past year was in their home for 10 years before selling – an all-time survey high for tenure of homeownership.
NAR also recently released its economic and housing forecast for 2015 and 2016. NAR predicts existing-home sales will fall slightly in 2014, to 4.9 million, below 2013’s mark of 5.1 million. The trade group predicts sales of 5.3 million next year in 2015 and 5.4 million in 2016. Yun said he expects the national median existing-home price to rise 4 percent both next year and in 2016.
In the Northeast, pending home sales increased slightly in October from last month, inching up 0.5 percent to 87.9, 3.4 percent above a year ago. However, an index reading of 87.9 is still below historic averages (100).
In the Midwest the index slightly declined 0.6 percent to 100.6 in October, and is now 3 percent below October 2013. Pending home sales in the South decreased 1 percent to an index of 118.3 in October, but is still 3.9 percent above last October. The index in the West fell 3.2 percent in October to 98.1, but remains 4.1 percent above a year ago.
