January Pending Home Sales Index
by Brian Pate, The Pate Realty Group at Keller Williams Realty, Raleigh, NC
The founder of the world’s largest retailer, Sam Walton, would have preferred to see higher expectations in the latest Case Shiller Pending Home Sales Index. This National Association of Realtors (NAR) measure of contracts signed on existing homes declined 2.8% in January, indicating we should expect fewer closings on these homes a couple of months out.
Pending Home Sales are still ahead of where they were a year ago. And actual existing home sales are forecast to reach 5.57 million this year, up 2.2% from 2016, with the median home price up 4%. Last year saw these sales grow 3.8%, with prices up 5.1%.
Here in the Triangle area, inventory remains low near only 7,000 listings on the market. At one point in January, the number of active listings went below 7,000 listings for the first time in my real estate career.
The expectation is for that trend to continue as we finish up the 1st quarter. It will be interesting in another 30 days to compare the January Pending Home Sales Index to February’s numbers. My guess is there will be much more activity in February nationally and locally Median Home Prices should rise.
Inventory in the Triangle MLS typically grows in March and we expect to see that happen again this year with peaks between 7,750 and 8,000 listings. Once that hits, expect to see those numbers nose dive again.
There is concern about the shortage of listings in many areas, which is edging up home prices. Indeed, the latest Case-Shiller Home Price Index reported a 5.8% annual increase in December, a 30-month high.
In the Triangle area, the average annual increase was 5.9% and remains just ahead of national averages.
Yet the Index Committee’s Chair pointed out: “Looking at real or inflation-adjusted home prices…the annual increase in home prices is currently 3.8%.”
His conclusion? “Home prices are rising, but the speed is not alarming.” And demand is there. The NAR chief economist explained that as households grow more confident in their personal finances and job growth continues throughout the country, home sales increase across the country.
Brian Pate, Realtor, Raleigh, NC Keller Williams Realty