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First Cut: Pending Home Sales Index about unchanged in November, activity uneven across regions

The NAR’s Pending Home Sales Index for November was about unchanged from October. It edged down a scant 0.1% to 106.6 after 106.7 and suggested that homebuying was settling in to a moderate pace of activity. Consumers have been taking advantage of low mortgage rates to lock in better affordability. However, much of the demand exercised this year could mean less in the near future. The index was up 5.5% compared to a year ago.

The relatively flat reading for the index was below market expectations and will be something of a disappointment. It failed to signal another bump higher for existing home sales in December which might have ended 2019 on a more upbeat note. Nonetheless, it does indicate that consumers are still active in the existing home market. What it doesn’t indicate is the strength of sales of new construction.

Pending home sales were uneven across regions in November. The pace of signing contracts was up 0.6% for the Northeast and 1.1% higher in the Midwest. There was a small dip of 0.2% for the South and a decline of 2.1% in the West. However, sales were up at least modestly compared to a year ago. The Northeast was up 2.6%, the West 4.3%, the Midwest 5.0%, and the South 7.7%. It was November 2018 when mortgage interest rates hit a near-term high and a lot of possible homebuyers put off a purchase in the hope of lower rates later on. That hope wasn’t disappointed. If rates are off their recent 3-year lows, they are still south of 4% and at levels attractive to homebuyers.

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