The hot housing market may finally be cooling off a bit.
Pending home sales, a leading indicator of the housing market's health, missed expectations and fell in November. The National Association of Realtors’ (NAR) Pending Home Sales Index, which tracks the number of homes that are under contract to be sold, dropped 2.2% in November from October. Analysts expected a 0.8% increase in sales, according to Bloomberg consensus estimates. Pending sales slid 2.7% from the same month a year ago.
“There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices,” NAR Chief Economist Lawrence Yun said in a statement.
Pending home sales fell the most in the Midwest, down 6.3%, followed by the West which saw sales slip 2.2% from a month earlier. Pending home sales in the Northeast and South were flat last month from October. Contract signing declined across all four regions of the U.S.
“Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply chain disruptions and labor shortages this year,” Yun said. “These aspects, along with the exorbitant prices and a lack of available homes, have created a much tougher buying season.”
Exorbitant home prices and historically how inventory is putting a damper on activity. Last month, the NAR reported that median existing-home prices for all housing types rose 13.9% to $353,900 in November from the same time last year. Meanwhile, total housing inventory at the end of November was 1.11 million units, down 9.8% from October and down 13.3% from one year ago (1.28 million).
Yun noted that housing demand continues to be high, adding that homes placed on the market for sale go from “listed status” to “under contract” in approximately 18 days.
“While more holiday gatherings and waning confidence could have caused activity to falter in November, home shoppers remained motivated. As we approach the new year, many are looking ahead, especially first-time homebuyers hoping to make a big change in 2022,” Realtor.com Chief Economist Danielle Hale said in a statement prior to the results. “Real estate demand continues to outmatch supply, and our survey data suggests that first-time shoppers both expect competition and are adjusting their plans to prepare for it further in advance.”
Amanda Fung is an editor at Yahoo Finance.
Read the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn