Index Signals that Home Sales May Remain in Slump

Wall Street Journal writer Sharon Nunn reported last week that, “The number of U.S. existing homes going under contract declined in November, signaling home sales may remain in a slump in the coming months.

“The National Association of Realtors on Friday said its pending home sales index, which tracks contract signings for purchases of previously owned homes, fell 0.7% from the prior month to 101.4 in November. Sales, unless they fall through, typically close within a month or two of signing.

“Economists surveyed by The Wall Street Journal had expected a 1% jump.”

The Journal article noted that, “The index was down 7.7% in November from a year earlier, marking the 11th-straight month of annual declines.

Rising borrowing costs and lackluster housing supply are driving up the cost of purchasing a home, keeping many potential buyers off the market.”

Ms. Nunn added that, “Mortgage rates have moved higher since mid-2017, making purchasing a home more expensive too. The average interest rate on a 30-year fixed-rate mortgage in November was 4.87%, up from 4.03% in January, according to Freddie Mac.

“Outside of the already difficult housing landscape, Lawrence Yun, the trade group’s chief economist, said Friday morning that the government shutdown will harm the housing market.

“‘Unlike past government shutdowns, with this present closure, flood insurance is not available,’ Mr. Yun said. ‘That means that roughly 40,000 homes per month may go unsold because purchasing a home requires flood insurance in those affected areas.'”

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