Pending home sales rebound in November

Americans signed more contracts to purchase homes in November, a rebound from the previous month, indicating that the housing market is still strong.

The National Association of Realtors said Monday that its pending home sales index, which measures the numbers of purchase contracts signed, rose 1.2 per cent to 108.5. The trade association said that contract signings measured year-over-year are up a robust 7.4 per cent.

Mortgage rates have fallen sharply in the past year in large part due to the Federal Reserve lowering its benchmark short-term interest rate. Lower rates have somewhat helped to offset rising home prices across the US, but affordability remains a persistent challenge for would-be buyers. The median sales price has climbed 5.4 per cent from a year ago to $257,400, outpacing wage growth.

A lack of supply has also been a hurdle for homeshoppers. The number of properties for sale in November dwindled 5.7 per cent from a year ago, to 1.64 million units, according to a report late last month.

Mortgage buyer Freddie Mac said last week that the average rate for a 30-year fixed-rate mortgage remained at a historically low 3.74 per cent, compared to 4.55 per cent a year ago. Most economists expect rates to remain low through 2020, which should support more buying.

The west saw the biggest gain in contract signings, up 5.5 per cent from last month. Pending home sales in the Midwest rose one per cent last month, while signings in the northeast and south inched down slightly.

AP