The National Association of Realtors ® (NAR) reported that US pending home sales in the west and midwest fell by 2.8 percent in January 2017 due to a shortage of listings in the market.
The decreased listings, though amongst a heightened, pre-recession level of demand, resulted in reduced affordability and, naturally, reduced pending sales.
“The significant shortage of listings last month, along with deteriorating affordability as the result of higher home prices and mortgage rates, kept many would-be buyers at bay,” chief economist Lawrence Yun said in the report.
The reduced pending sales, however, are also the result of the 3.3 percent greater existing sales. “Sales got off to a fantastic start in January,” Yun said, “but last month’s retreat in contract signings indicates that activity will likely be choppy in coming months as buyers compete for the meager number of listings in their price range.”
Parallel to Yun’s statement, December, 2016 sales were only half as much as the 1.6% projection, but sales in January, 2017 rose by 1%.
“Especially in the most expensive markets, prospective buyers will feel this squeeze to their budget and will likely have to come up with additional savings or compromise on home size or location,” Yun said.
Yun added that, in the more expensive markets, prospective buyers will feel pressure on their budgets and will likely need to organize additional savings or compromise on their desired living situations.
Pending sales act as an indicator of future sales, as they measure contract signings, but not closures.
By Editorial Staff