U.S. Pending Home Sales Decline as Inventory Woes Persist

Contract signings to purchase U.S. previously owned homes unexpectedly slumped in December, depressed by fewer listings of properties and representing a blemish after a recent spate of positive housing-market news.

An index of pending home sales decreased 4.9% from the month prior, the largest decline since May 2010, according to data out Wednesday from the National Association of Realtors. The median forecast of economists surveyed by Bloomberg called for a 0.5% gain. Compared with December 2018, however, contract signings were up 6.8% on an unadjusted basis.

Key Insights

• The monthly drop indicates housing demand is being thwarted by lean inventory that’s driving up asking prices and keeping prospective buyers from taking advantage of lower mortgage rates. A strong job market and income growth have also helped underpin home sales.
• A report earlier today showed a gauge of loan applications to buy homes increased to an 11-year high in the week ended Jan. 24, suggesting firmer home sales at the start of 2020.
• Pending home sales are often looked to as a leading indicator of existing-home purchases and a measure of the health of the housing market in the coming months