U.S. Pending home sales fell for the third straight time in November (the longest serie since December 2018). According to the National Association of Realtors (NAR), they dropped by 2.6 percent from the prior month (largest decline since April 2020) after falling by 0.9 percent in October and 2.0 percent in September. Pending home sales decresed in all four major regions.
Lawrence Yun, NAR’s chief economist said “The latest monthly decline is largely due to the shortage of inventory and fast-rising home prices“. Earlier this month, I highlighted that, in November, available inventory declined 22% from a year earlier to 1.28 million units, the lowest in data back to 1982. In addition, yesterday I noted that the S&P CoreLogic Case-Shiller index (20-City Composite) rose at the fastest pace since June 2014.
I also pointed that Covid-19 resurgence has affected demand since October. Given that pending home sales is a leading indicator of housing activity, it is very likely that existing home sales will drop for the second straight time in December as suggested by the chart below.