A measure of contract signings for the purchase of previously owned homes unexpectedly increased in November after surging a month earlier, according to data released by the National Association of Realtors.
The index rose 0.2% on a month-over-month basis (the previous estimate was for a 0.4% drop) after a 3.5% increase that was the largest since February. The gauge increased 0.6% year-over-year on unadjusted basis after rising 1.2%.
The increase in contract signings indicates previously owned home sales, tabulated when a deal closes, will stay steady in coming months after climbing in November to an almost 11-year high. Robust employment and cheap borrowing costs are underpinning the housing recovery. Nonetheless, lean inventory remains a hurdle for the market as it is keeping home prices rising faster than income growth.
“The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear,” Lawrence Yun, NAR’s chief economist, said in a statement. “However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust.”
Purchases advanced 4.1% in the Northeast and 0.4% in the Midwest. However, contract signings dropped 1.8% in the West and fell 0.4% in the South. Economists consider pending sales a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a deal closes, typically a month or two later.