Pending home sales increased in November, led by a strong performance in the West and year-over-year gains in all four regions. Still, economists warn not to celebrate too early: While 2020 will bring relief to the housing industry, the tight market and inventory shortages will continue to plague potential homebuyers.
The numbers: The index of pending home sales increased 1.2% in November from the previous month, the National Association of Realtors reported Monday. In October, sales had fallen after two consecutive months of increases.
The index records transactions that have not yet closed but where a contract has been signed. As a result, the index serves as an indicator for existing-home sales reports in the coming months.
What happened: Compared with November 2018, contract signings were up 7.4%. The index is benchmarked to contract-signing activity in 2001.
Sales in the West increased substantially by 5.5%, while contract signings only saw marginal changes in the Northeast (down 0.1%), South (down 0.2%) and Midwest (up 1%). When compared with last year, sales were up in all four regions.
Big picture: The positive November data aside, the inventory of homes for sale will remain a challenge. “Despite the insufficient level of inventory, pending home contracts still increased in November,” said Lawrence Yun, chief economist for the National Association of Realtors. “The favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”
