Pending U.S. home sales decreased in November, and The Associated Press reports the downtown likely reflects the drag caused by rising mortgage rates and the shallow inventory of properties on the market.
The National Association of Realtors says its seasonally adjusted pending home sales index fell 2.5% to 107.3 last month, the lowest reading since the start of 2016. Pending sales declined in the Midwest, South and West, while improving in the Northeast.
The slowdown marks a reversal for the housing market, as sales growth has been solid for the past year. Completed sales of existing homes in November climbed their highest pace in nearly a decade, reaching a seasonally adjusted annual rate of 5.61 million, the Realtors said last week. But the pending sales contracts suggest that demand may be weakening now that the costs of purchasing a home have increased.
Pending sales contracts are a barometer of future purchases. A sale is typically completed a month or two after a contract is signed.
Mortgage rates began to surge after Donald Trump’s presidential win in November, making it more expensive to purchase a home. Average 30-year fixed rate mortgages were 4.3% last week, up from a 52-week low of 3.4%, according to mortgage buyer Freddie Mac.