The Pending Home Sales Index was virtually unchanged in December, but has increased year-over-year for 16 consecutive months. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR), increased 0.1% in December to 106.8 from a downwardly revised 106.7 November, and was 4.2% above the same month a year ago.
The PHSI increased in the Northeast by 6.1% due to a warm December, but fell in the remaining three regions, ranging from a 0.5% decrease in the South to 2.1% in the West. Year- over-year, the Northeast increased 15.3%, followed by the Midwest at 3.6%, 3.4% in the West and a 1.0% increase in the South.
Existing sales surged back in December following the November collapse, likely because the industry became more familiar with the implementation of The Know Before You Owe mortgage disclosure rule. Improving economic conditions and rising employment suggest a continuing recovery in existing sales. Despite a strong increase in new home sales, NAR suggested that homebuilding is “still grossly inadequate.” However, the long-term weakness among first-time buyers will continue to dampen all sales in 2016.