Pending home sales in the U.S. tumbled by much more than expected in the month of December, according to a report released by the National Association of Realtors on Thursday.
NAR said its pending home sales index plunged by 3.8 percent to 117.7 in December after sinking by 2.3 percent to a downwardly revised 122.3 in November.
Economists had expected pending home sales to edge down by 0.2 percent compared to the 2.2 percent slump originally reported for the previous month.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
“Pending home sales faded toward the end of 2021, as a diminished housing supply offered consumers very few options,” said NAR’s chief economist Lawrence Yun.
He added, “Mortgage rates have climbed steadily the last several weeks, which unfortunately will ultimately push aside marginal buyers.”
The much steeper than expected drop in pending home sales reflected decreases in contract signings across all four regions of the country.
Pending home sales in the West led the way lower, plummeting by 10.0 percent, while pending home sales in the Midwest also tumbled by 3.7 percent.
The report showed pending home sales in the South and Northeast also slumped by 1.8 percent and 1.2 percent, respectively.
Looking ahead, NAR said existing home sales are expected to sink by 2.8 percent in 2022, while home prices are expected to surge by 5.1 percent due to the ongoing housing shortage.
NAR released a separate report last Thursday showing U.S. existing home sales declined in December, snapping a streak of three straight months of gains.
The report said existing home sales plunged by 4.6 percent to an annual rate of 6.18 million in December after jumping by 2.2 percent to a ten-month high of 6.48 million in November.
Despite the monthly decrease, NAR said existing home sales totaled 6.12 million in 2021, reflecting an 8.5 percent spike from 2020 and the highest annual level since 2006.
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