Overall pending home sales in the U.S. fell in November as multiple markets struggle with record low inventories of homes for sale. Even so, economists say they’re optimistic that buyers will have more opportunities to buy a home next year.
The National Association of Realtors reported that its Pending Home Sales Index dropped 2.2% in November, reversing a 2% gain the previous month. Each of the four major U.S. regions saw pending home sales decline, and they’re also down 2.7% on a national basis from the same period one year ago.
Pending home sales are a key metric as they’re one of the most reliable forward-looking indicators of home sales, based on contract signings.
NAR Chief Economist Lawrence Yun said the dip in contract signings in November is likely due to the low housing supply and rising hesitancy among prospective home buyers, who’re concerned by rising home prices. In addition, the spread of the Omicron variant of COVID-19 may have also deterred some buyers, Yun said.
“Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply chain disruptions and labor shortages this year,” Yun explained. “These aspects, along with exorbitant prices and a lack of available homes have created a much tougher buying season.”
Despite the tough conditions, Yun said he believes buyers will see more openings emerge in the existing home for sale market in 2022.
“While I expect neither a price reduction nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability,” Yun predicted.