After reporting a sharp increase in pending home sales in the U.S. in the previous month, the National Association of Realtors released a report on Wednesday showing pending home sales pulled back by far more than expected in the month of December.
NAR said its pending home sales plummeted by 9.3 percent to 71.8 in December after surging by 3.3 percent to 79.2 in November. Economists had expected pending home sales to dip by 0.3 percent.
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.
“The housing sector is not out of the woods yet,” said NAR Chief Economist Lawrence Yun. “After several months of encouraging signs in pending contracts and closed sales, the December new contract figures have dampened the short-term outlook.”
He added, “We’ll be watching the data in the coming months to determine whether the soft contract signings were a one-month aberration or the start of an underlying trend.”
The sharp pullback by pending home sales reflected weakness in all four regions of the country, with pending home sales in the Midwest, West and Northeast showing particularly steep drops.
Pending home sales in the Midwest and West plunged by 14.9 percent and 13.3 percent, respectively, while pending home sales in the Northeast tumbled by 11.0 percent.
NAR said pending home sales in the South also slumped by 4.0 percent in December but were up by 2.0 percent year-over-year.
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