Now, the PHSI has taken a downward track due to an increase in mortgage rates and continuing supply woes.
“The budget of many prospective buyers last month was dealt an abrupt hit by the quick ascension of rates immediately after the election,” said NAR Chief Economist Lawrence Yun in a statement.
“Already faced with climbing home prices and minimal listings in the affordable price range, fewer home shoppers in most of the country were successfully able to sign a contract.”
November’s PHSI slipped to 107.3 — a 2.5 percent decrease from October’s 110.0.
The PHSI in the Northeast increased to 97.5 and is 5.7 percent above a year ago. In the Midwest, the index declined to 103.5, and is now 2.4 percent lower than November 2015.
Pending home sales in the South declined to an index of 118.7 — a 1.2 percent month-over-month and 1.3 percent year-over-year increase. The West suffered the biggest loss with an index of 101.0 — a 6.7 percent month-over-month and 1.0 percent year-over-year decrease.
Yun says the health of the 2017 housing market will continue to be dependent on borrowing costs and consistent job growth.
“Healthy local job markets amidst tight supply means many areas will remain competitive with prices on the rise. Those rushing to lock in a rate before they advance even higher will probably have few listings to choose from,” said Yun.
“Some buyers will have to expand the area of their home search or be forced to delay in order to save a little more money for their down payment.”
NAR uses a large national sample of signed residential property sale contracts to build its monthly pending home sales index. The sample size typically represents about 20 percent of transactions for existing-home sales.
The index level was benchmarked to 100 in 2001, which was the first year to be examined. Existing-home sales in 2001 were in the 5 million to 5.5 million range, which is considered normal for the population in the U.S.