A gauge of U.S. pending home sales dropped unexpectedly in November as high prices and low inventory capped home buying.
The National Association of Realtors’ pending home sales index fell 2.2% from the previous month to 122.4, data showed Wednesday, more than all estimates for a Bloomberg survey. An index of 100 equals the level of contractual activity in 2001.
The figures suggest the housing market is easing towards the end of a year that has been boosted by strong demand and low borrowing costs. However, high prices and limited stocks are weighing on activity.
“There were fewer pending home sales stocks this time around, which I would attribute to low housing supply, but also buyers who are hesitant about home prices,” said economist Lawrence Yun. chief of the association, in a press release.
Contract signings fell in all four regions compared to the previous month. The Midwest posted the biggest drop, down 6.3%, the biggest since February.
Compared to a year earlier, contract signings fell 2.7% on a non-seasonally adjusted basis.
A separate report last week showed sales of previously owned US homes rose for a third consecutive month in November. Pending home sales data is often considered a leading indicator of existing home sales, given that they are usually under contract for a month or two before being sold.
Unlike existing home sales, which are calculated at the close of a contract, the pending home sales index is based on contract signings.
“Competition from buyers alone is relentless, but housing seekers have also faced the negative impacts of supply chain disruptions and labor shortages this year,” Yun said. .