After securing a mortgage estimate, more Americans put pen to paper in November and kick-started the homebuying process, according to a newly released sales report.
Pending home sales rose nearly 3 percent in the last full month of fall, the National Association of Realtors reported. More specifically, NAR's Pending Home Sales Index reached 106.9 from 104.1 last year during the corresponding month.
"Pending home sales haven't fallen on a year-over-year basis since 2014."
The uptick in contract signings marks 15 straight months of year-over-year gains. On a monthly basis, however, pending home sales slipped. In October, the PHSI was at 107.9.
Lawrence Yun, NAR chief economist, indicated that the slight decline is similar to how pending sales have played out since last spring. In other words, the free home values that buyers pursue have some thinking it's best to wait it out for the time being.
"Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months, despite low mortgage rates and solid job gains," Yun explained. "While feedback continues to suggest healthy levels of buyer interest, available listings that are move-in ready and in affordable price ranges remain hard to come by for many would-be buyers."
Fewer options having impact
Also serving as somewhat of a deterrent is supply. Yun referenced how consistently weak housing starts in 2015 have had an impact on inventory levels. This has created a tight dynamic on the real estate environment, signaling an increase in home prices when listings are limited.
"Especially with mortgage rates likely on the rise, affordability issues could creep up enough to temper sales growth," Yun further pointed out.
Mortgage rates kicked off 2016 similar to where they resided at in 2015. For a 30-year fixed-rate mortgage, a prime borrower paid 3.9 percent in interest in the first week of January. That's according to Freddie Mac's Primary Mortgage Market Survey. A year ago, 30-year FRMs were 3.7 percent.
Sean Becketti, Freddie Mac chief economist, said that mortgage rates fell back below 4 percent due to global economic headwinds, as China's economy is reeling.
"U.S. Treasury bond yields fell amidst a global equity sell off and flight to safety," Becketti said. "In response, the 30-year mortgage rate dipped 4 basis points to 3.97 percent."