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Pending Home Sales Post First Gain in Three Months

Despite a recent slump in pending home sales, October enjoyed a slight upward swing with the number of contracts signed. According to the National Association of Realtors, the Pending Home Sales Index rose to 107.7 for the month. This number is 3.9 percent higher than this time last year. The index is often used to indicate the direction of home sales and includes contracts closed within 60 days.

According to economists, pending sales have been slow through the fall months. This is primarily due to a low number of houses in inventory and rising prices. For the month of October, the Northeast section of the country saw the most improvement. This area has not been as affected by high demand, low supply, and price appreciation like other portions of the United States. In the South and West, home prices are expensive and raise concerns about affordability.

Luckily, strengthening local job markets are fueling buyer demands. Even though contract activity has seen a slight downward trend since spring, existing home sales have exceeded a 5 million pace for eight months straight. In areas where energy prices are decreasing, sales seem to be softening.

The NAR estimates home sales will keep increasing into the new year. However, rising prices, high interest rates, and low inventory numbers will stifle growth to 3 percent. Unless supply of new and existing homes is dramatically heightened, prices and rent will continue to increase and exceed wages. This will keep many individuals from being able to purchase homes. Once people gain confidence to list property, things should loosen and become better.