Washington (AFP) – U.S. pending home sales rose slightly in November, ending five consecutive months of declines, the National Association of Realtors (NAR) said Monday.
NAR said its pending home sales index — a contract-based indicator of activity in the residential real-estate market — edged up 0.2 percent to 101.7 in November.
The November number was much weaker than the 1.5 percent average forecast of analysts.
NAR revised sharply downward the October data to a fall of 1.2 percent, double the prior estimate.
Pending home sales are a forward-looking indicator that reflects contracts signed but not closed.
“We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014,” said Lawrence Yun, NAR chief economist.
“Although the final months of 2013 are finishing on a soft note, the year as a whole will end with the best sales total in seven years.”
The November figure was the first gain in pending home sales since May, when mortgage interest rates began rising after the Federal Reserve signaled a scale-back in its monetary stimulus.
Compared with a year ago, the pending home sales index was down 1.6 percent.
Yun predicted that higher mortgage rates and strong home price gains would yield more modest growth in home values in 2014.
Cooper Howes of Barclays Research said that the year-end softness was due in part to the jump in mortgage rates.
“This effect has been diminishing, however, and we would expect that pending home sales will gradually resume their upward trend given the subsequent easing in financial conditions,” Howes said.
Robert Kavcic of BMO Capital Markets also said the market remained on the recovery track.
“We continue to believe that the U.S. housing market will absorb the upward move in mortgage rates and push higher in 2014, helped by still-attractive affordability, better job growth and improved confidence in the recovery,” he said.
Copyright 2013 The National Memo