Pending home sales dipped at the end of 2019, with each of the four major regions reporting a drop in sales contract activity. The South saw the biggest plunge in contract signings, the National Association of REALTORS® reported Wednesday.
NAR’s Pending Home Sales Index—a forward-looking indicator based on contract signings—decreased 4.9% in December 2019 compared to the previous month. Still, contract signings were up 4.6% over last year.
Homebuying demand remains high but the limited housing inventory, especially in the lower price ranges, is holding back sales growth, NAR says. “Mortgage rates are expected to hold under 4% for most of 2020, while net job creation will likely exceed two million,” says Lawrence Yun, NAR’s chief economist. But “due to the shortage of affordable homes, home sales growth will only rise by around 3%.”
Home prices aren’t likely to cool, Yun adds. “National median home price growth is in no danger of falling due to inventory shortages and will rise by 4%,” Yun predicts. “The new-home construction market also looks brighter, with housing starts and new-home sales set to rise 6% and 10%, respectively.”
The markets driving the most buyer attention lately tend to be where listing prices hover around $250,000, Yun says. Realtor.com® data shows the most active listings with buyer activity include Fort Wayne, Ind.; Burlington, N.C.; Topeka, Kan.; Pueblo, Colo.; and Columbus, Ohio.
“The state of housing in 2020 will depend on whether home builders bring more affordable homes to the market,” Yun says. “Home prices and even rents are increasing too rapidly, and more inventory would help correct the problem and slow price gains.” Read from NAR’s Real Estate Forecast Summit: 4 Reasons There’s Not Enough Building