Contract signings held steady in November, posting a small gain as rising prices and tight inventory restrain faster growth.
Pending home sales in November rose 0.2 percent to 109.5 on the Pending Home Sales Index, up from 109.3 in October, remaining at the highest level since June, the National Association of Realtors (NAR) reported on Wednesday.
{mosads}November’s modest increase pushes sales 0.8 percent above a year ago, the first month since June that sales were up on a yearly basis.
NAR is forecasting that existing-home sales and price growth will slow heading into 2018, primarily because of how tax benefits for homeowners will change, especially in some high-cost areas.
“The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear,” said Lawrence Yun, NAR chief economist.
“However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust,” Yun said.
One of the biggest questions for next year is whether supply can improve enough to slow price growth and keep home purchases more affordable, according to Yun.
Nationwide’s chief economist David Berson said the increase in contract signings and closings suggests that December’s existing home sales also will increase, which would push up sales of existing homes to their highest annual sales pace since 2006.
Existing-home sales surged 5.6 percent in November, the third straight month of growth, hitting their strongest pace in almost 11 years, NAR reported last week.
Last month’s increase raised concerns, too.
Sales prices were up 5.8 percent, which is more than double wage growth, and the 3.4-month supply of homes on the market was the lowest since NAR began tracking in 1999.
“Sales do have room for growth in most areas, but nationally, overall activity could be slightly negative,” Yun said about next year’s forecast.
“Markets with high home prices and property taxes will likely feel some impact from the reduced tax benefits of owning a home,” he said.
Existing-home sales are set to finish the year at around 5.54 million, which is an increase of 1.7 percent from 2016.
The national median existing-home price this year is expected to increase around 6 percent.
For 2018, Yun expects a small decline in existing sales next year with price growth moderating to around 2 percent.
Regionally, pending sales rose 4.1 percent in the Northeast while sales increased 0.4 percent in the Midwest.
Pending sales in the South decreased 0.4 percent and sales in the West fell 1.8 percent in November.