Pending Home Sales Up Slightly

Date: December 01, 2015

October Sales Up 0.2%, Less Than Economists Forecast

The latest data from the National Association of Realtors shows that in October, pending home sales rose just 0.2% on its index, bringing it to 107.7. Reuters reported that this result was much lower than economists’ average forecast of a 1.0% rise. Typically, pending home sales become signed contracts within a month or two, Reuters said, meaning the small gain on this index last month suggested existing home sales will likely be lower for the next few months. Still, pending home sales are up 3.9% from October 2014, though gains are uneven. Contracts have risen 4.5% in the Northeast and 1.7% in the West, while they have fallen by 1.7% in the South and 1.0% in the Midwest. The AP reported that according to additional housing data, “the number of listings on the market has dropped 4.5 percent” in the past year, and this narrowing “selection of homes on the market has pushed up sales prices 5.8 percent from a year ago to a median of $219,600.” Jim O’Sullivan, chief US economist at High Frequency Economics, said, “The data suggest that growth in home sales has slowed significantly.” However, he allowed that volatility in housing reports make conclusions about the direction of the market premature.

What This Means For Small Businesses

This US housing market has been seeing variation in terms of post-recession results, with more success in gaining ground in some regions compared to others. Bloomberg News quoted NAR chief economist Lawrence Yun as warning, “Unless sizeable supply gains occur for new and existing homes, prices and rents will continue to exceed wages into next year and hamstring a large pool of potential buyers trying to buy a home.” This weakening of the housing market could negatively effect the US economy as a whole.

Additional Reading

CNBC also covered the latest NAR pending home sales report.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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