The Pending Home Sales Index tumbled 8.7% to 92.4 for December, according to a National Association of Realtors (NAR) report released today. That puts this measure of contracts to buy existing single-family homes, condos, and co-ops at its lowest point since October 2011.
Following November's revised 0.3% dip, analysts had expected a slight 0.5% decline. With November's reading being revised to a decrease, this latest report continues the index's ongoing decline since May. . Compared to December 2012, pending home sales are down 8.8%.
The index is based on contract signings (with sales usually finalized one or two months later) and is benchmarked to 2001 contract activity. (An index of 100 is equal to the average level of contract activity during 2001, which was the first year the association examined data).
NAR chief economist Lawrence Yun noted several reasons for December's decline. "Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes or making offers," Yun said in a statement today. "Home prices rising faster than income is also giving pause to some potential buyers, while at the same time a lack of inventory means insufficient choice. Although it could take several months for us to get a clearer read on market momentum, job growth and pent-up demand are positive factors."
Looking ahead, the NAR expects the median existing-home price to rise 5.4% for 2014 overall, while existing-home sales are expected to remain steady at 5.1 million for the year.
-- Material from The Associated Press was used in this report.