Pending home sales fell in December after reaching a 19-month high. The National Association of Realtors (NAR) reported a 3.5% decrease in the Pending Home Sales Index (PHSI) in December, declining to 96.6 from 100.1 as revised in November. The December level is 5.6% above the level of a year ago.
Across the regions, the PHSI increased 4.0% in the Midwest in December, but fell 11.0% in the West. Although the Northeast is slightly below the level from a year ago, the Midwest is up 13.3% from last December followed by the South at 4.9% and the West at 3.7%
The PHSI is a forward-looking indicator based on contracts signed. However, contract cancellations continue to be reported by a third of NAR members. Attractive pricing and historically low interest rates continue to create a great opportunity to purchase a home. However, buyers face strong headwinds in the form of strict lending conditions.