Pending home sales inch higher as tight inventory stifles housing market

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The numbers: U.S. pending home sales rose 0.5% in December, the National Association of Realtors said Wednesday. That’s the highest reading since March, even though the index stands just 0.5% higher than a year ago.

What happened: December marked the third month of increases for NAR’s index of pending home sales, which tracks real-estate transactions in which a contract has been signed, but the transaction hasn’t closed.

The 0.5% increase exactly matched the consensus forecast from Econoday.

Contract signings usually precede sales by 45 to 60 days, and NAR said in a release that the slight December uptick suggests the housing market will start 2018 with “a small trace of momentum.” Still, sales throughout 2017 were only 1.1% higher than in 2016, and the Realtors expect the recent tax-law changes to take a bite out of sales in 2018.

See: Tax overhaul creates a ‘headwind’ for housing, Goldman says

The big picture: Tight inventory was again the culprit for a disappointing pace of sales in December, NAR said.

December’s pending sales were mixed regionally: down 5.1% in the Northeast and 0.3% in the Midwest, but up 2.6% in the South and 1.5% in the West.

Read on: Home ownership rate reaches three-year high as rebound from crisis gathers pace



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