U.S. pending home sales drop slightly more than forecast in December

The National Association of Realtors (NAR) announced on Friday its seasonally adjusted pending home sales index (PHSI) slipped 0.3 percent m-o-m to 125.5 in December, after a revised 2.5 percent m-o-m drop in November (originally a 2.6 percent m-o-m decline). This marked the fourth consecutive monthly drop in the value of the index.

Economists had expected pending home sales to edged down 0.1 m-o-m in December.

On y-o-y basis, the index surged 21.4 percent, following a revised 16.6 percent jump in November (originally a 16.4 percent m-o-m climb).

According to the report, two of all four regional indices recorded month-over-month increases in December, but all four regions rose at double-digit rates from one year ago.

The index in the Midwest dropped 3.6 percent m-o-m to 111.7 last month, up 13.9 from December 2019. Meanwhile, the index in the West was flat m-o-m in December, holding at 111.3, which was up 18.9 percent from a year ago. The Northeast PHSI went up 3.1 percent m-o-m to 112.0 in December, a 22.1 percent surge from a year ago. Pending home sales in the South edged up 0.1 percent m-o-m to an index of 150.6 in December, up 26.6 percent from December 2019.

"Pending home sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale," noted Lawrence Yun, NAR's chief economist. "There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings."