“The latest monthly decline is largely due to the shortage of inventory and fast-rising home prices,” said Lawrence Yun, NAR’s chief economist. “It is important to keep in mind that the current sales and prices are far stronger than a year ago.”
Home prices reached a 14-year high in October, according to CoreLogic’s Case-Shiller index covering home prices. The National Index is now up 24.5% from its former high in July 2006, and was up 8.4% year over year.
As 2021 approaches, Yun predicts that there will be a slight uptick in mortgage rates to around 3%, existing-home sales will increase by roughly 10% and new home sales will increase by 20%.
Now that a second stimulus package has been passed and two vaccines are being administered, Yun said economic growth is guaranteed, but high government borrowing will put modest upward pressure on interest rates.
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Pending home sales fell the most in the West by 4.7%, but still remained 10.4% higher than a year ago. Pending home sales decreased the least in the South, falling 1.1% in November, but were 21.3% higher than last year.
In the Northeast, pending home sales fell 3.3% in November, but is still up 15.3% from last year. The Midwest saw about the same, as its index fell 3.1% but is still up 14.1% from last year.
“The market is incredibly swift this winter with the listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates,” Yun said.
New home sales and existing home sales both also ticked down last month. Sales of newly built homes dipped 11% below October’s revised rate, but was still 21% higher than the same time period last year, according to the Census Bureau. Existing home sales decreased 2.5% in November, ending its five-month streak of month-over-month gains. Compared to last November, existing home sales were still up 25.8%, NAR said.