Pending home sales unexpectedly decrease

USA pending home sales index is scheduled to be released today in the evening session and market participants are expecting to rise 0.6% in the month of November against previous month figure at 0.2%.

It’s becoming increasingly clear that the recovering housing market is facing some headwinds, including home prices outpacing income growth in some areas and tight supplies. In the South, sales rose 1.3% to an index score of 119.9 and are now 0.5% below the November 2014 index. He also said new-home construction is “still deficient”.

Still, overall US pending home sales were 2.7 percent higher than November of 2014.

Lawrence Yun, the NAR’s chief economist, attributed recent troubles in the housing market to a run-up in home prices and a persistent shortage in for-sale homes that have limited buyer options. However, existing-home sales – based on closings – may rebound in December. Nonetheless, the ongoing softness in pending sales suggests some risk to the housing market outlook in early 2016.

Economists had pencilled in growth of 0.5% for the index. Hiring remains strong and mortgage costs are close to record low levels even after the Federal Reserve this month raised its benchmark interest rate for the first time in nearly a decade.

Estimates in the Bloomberg survey ranged from little change to a rise of 4 percent. Existing-home sales reached an annual pace of 5.58 million this summer, the highest level since late 2009.

The PHSI in the Northeast decreased 3.0 percent to 91.8 in November, but is still 4.3 percent above a year ago.

The consensus estimate called for a month-over-month increase of 0.5% in pending sales. According to the National Association of Realtors, however, the drop in November was not a reflection of weaker demand but rather new regulations that disrupted the purchase pipeline and extended the closing process by about five days.