Pending home sales fell for the second month in December and are finishing up the year well below their December 2020 level. The National Association of Realtors® (NAR) said its Pending Home Sale Index (PHSI) was down 3.8 percent from November and is 6.9 percent below its level at the end of the prior year. Pending sales had declined 2.2 percent in November. The PHSI, which is based on signed contracts for the purchase of pre-owned single-family houses, townhomes, condos, and cooperative apartments, dipped from 122.4 in November to 117.7. An index of 100 is equal to the level of contract activity in 2001. Analysts polled by Econoday had expected the index to rise 0.6 percent. Those polled for Trading Economics were closer to the mark with a consensus of an 0.2 percent decline. It was an unusually large gap between the two forecasts which are typically nearly identical. “Pending home sales faded toward the end of 2021, as a diminished housing supply offered consumers very few options,” said Lawrence Yun, NAR’s chief economist. “Mortgage rates have climbed steadily the last several weeks, which unfortunately will ultimately push aside marginal buyers.” Even with December’s slowdown in transactions, Yun says last year was an overall great period for housing in terms of sales and price appreciation . “The market will likely endure a minor reduction in sales as mortgage rates continue to edge higher,” he added. He forecasts the 30-year fixed mortgage rate to jump to 3.9 percent by the fourth quarter.

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