WASHINGTON – The number of Americans signing contracts to buy homes rose modestly in November as a strengthening economy helped nudge some would-be homebuyers.
The National Association of Realtors said Wednesday that its seasonally adjusted pending home sales index climbed 0.8 per cent the past month to 104.8 from a revised 104 in October. The index remains slightly below its 2013 average but is 4.1 per cent higher than last November.
Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale. The number of contract signings increased in the Northeast, South and West last month, while declining in the Midwest.
“Home sales activity will likely continue to be uninspiring in the months ahead,” Laura Rosner, an economist at BNP Paribas, said in a research note to clients.
Housing has struggled to fully rebound since the recession ended more than five years ago. Many potential buyers lack the savings and strong credit history needed to afford a home, causing them to rent or remain in their existing houses instead of upgrading. Higher home prices and relatively stagnant incomes have also curtailed buying.
Separate NAR data last week showed that sales of existing homes fell 6.1 per cent in November to the slowest pace in six months,
The Commerce Department said last week that new home sales slid 1.6 per cent in November to a seasonally adjusted annual rate of 438,000. That remains significantly below the annual rate of 700,000 seen during the 1990s.
The recent decline in mortgage rates has yet to significantly spur more buyers into the market. At the same time, there are fewer distressed properties and bargains coming onto the market that attract investors as buyers.
NAR estimates that 2014 sales will end up below 2013 levels. The trade group forecasts that 4.94 million existing homes will be sold this year, down 3 per cent from 5.09 million in 2013. Analysts say sales of roughly 5.5 million existing homes are common in a healthy real estate market.
Hopes are higher for the new year. In 2015, the group expects sales of existing homes to jump to 5.3 million.
The U.S. economy has generated 2.65 million new jobs so far this year, and the unemployment rate has dropped to 5.8 per cent from 6.7 per cent at the start of 2014. Buying could also be helped by average 30-year mortgage rates staying close to a 19-month low. Rates nationwide averaged 3.87 per cent this week, according to the mortgage company Freddie Mac.