A home sales pending measure fell for the third straight month in November, suggesting that higher prices and limited inventory are slowing momentum in the property market despite record-low borrowing costs.
The National Association of Realtors' home purchase contract signing index fell 2.6% month-on-month to 125.7, according to Tuesday. The median estimate in a Bloomberg poll of economists called for no change in November. Compared to last year, unadjusted sales increased 16%.
The month-over-month decline in the index shows milder activity in the property market as prices continue to rise amid meager inventory levels. Still, the pending sales ad remains well above pre-pandemic levels, indicating still increased demand as buyers seek more space.
"The recent monthly decline is mainly due to inventory shortages and rapidly rising house prices," NAR chief economist Lawrence Yun said in a statement. "The market is incredibly fast this winter with listed houses on average less than a month under contract as a backlog of buyers wants to take advantage of record-low mortgage rates."
A separate report last week showed that existing property sales, calculated at the time the contract was signed, declined for the first time in six months in November, underscoring the challenges facing the real estate market as rising prices jeopardize affordability.
Home sales decreased in all four major US regions. The number of contract signings in the West fell 4.7% to a four-month low. In the Midwest, outstanding sales were down 3.1% while in the South they were down 1.1%.