With the Bump in Interest Rates Behind Us, Sales are Returning to Normal

The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts, ticked up 0.2% in November to 101.7 from a downwardly revised 101.5 in October. The November 2013 PHSI reported by the National Association of Realtors (NAR) was 1.6% lower than the same period a year ago.

Pending Home Sales November 2013

The November PHSI increased 2.3% and 1.8% from October in the South and West respectively, but fell 2.7% and 3.1% in the Northeast and Midwest. Year-over-year, the November PHSI increased 1.9% in the Northeast and less than one percent in the Midwest and South; the November PHSI fell 8.7% from the previous year in the West.

With the PHSI essentially flat at the end of the year, it is expected that existing home sales will remain roughly level at least during the first few months of 2014. After a surge in sales reacting to the late summer increase in interest rates, potential buyers have recognized that these modestly higher rates still represent very favorable home buying conditions. These new data suggest that after this brief period of fluctuation, the long-term trend is one of a stable level of sales.

Over the long run, economic and housing data continue to describe a modest recovery for housing that will lead to higher levels of construction activity in the years ahead. While recent information illustrates that there will be ups and downs along the way, demographic growth and pent-up demand will support housing recovery going forward.

8 Responses to With the Bump in Interest Rates Behind Us, Sales are Returning to Normal

  1. […] Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years with occasional ups and downs. For example, the market share may be on the decline for the near term, given the ongoing rebound in the overall single-family construction sector and reduced levels of first-time homebuyers. […]

  2. […] Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years with occasional ups and downs. For example, the market share may be on the decline for the near term, given the ongoing rebound in the overall single-family construction sector and reduced levels of first-time homebuyers. […]

  3. […] Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years with occasional ups and downs. For example, the market share may be on the decline for the near term, given the ongoing rebound in the overall single-family construction sector and reduced levels of first-time homebuyers. […]

  4. […] homes sales, as reported by the National Association of Realtors, were down 4.3% in November, pending home sales increased for the month, as home buyers adjusted to a new interest rate environment and consumer confidence improved. In […]

  5. […] homes sales, as reported by the National Association of Realtors, were down 4.3% in November, pending home sales increased for the month, as home buyers adjusted to a new interest rate environment and consumer confidence improved. In […]

  6. […] Read the full article here: With the Bump in Interest Rates Behind Us, Sales are Returning to Normal […]

  7. […] November Pending Home Sales Index ticked up 0.2% in November, so it was anticipated that existing home sales would increase moderately. As mortgage rates remain […]

  8. […] November Pending Home Sales Index ticked up 0.2% in November, so it was anticipated that existing home sales would increase moderately. As mortgage rates remain […]

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