Pending Home Sales Fall 2.2% As Supply-Demand Problems Drive Up Prices

Pending home sales missed expectations and fell in November from October, a sign that the housing market is finally cooling.

On Wednesday, the National Association of Realtors (NAR) released data that showed pending home sales dropped by 2.2% last month. Pending sales had fallen 2.7% for the same period of 2020.

Analysts had expected a 0.8% increase in sales, according to Bloomberg consensus estimates.

Lawrence Yun, NAR’s chief economist, explained this decline as a supply and demand imbalance that has made buyers less keen to buy now because of higher prices.

"There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices," said Yun. "While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability."

High demand for housing has driven up prices for homes, but global supply chain bottlenecks have pushed up prices for home construction materials. A shortage of workers that began before the COVID-19 pandemic also has left home developers short-handed, pushing prices up further.

There have been declines across the country with the highest drop in sales in the Northeast, where pending home sales fell by 8.5%, followed by the Midwest where they slid by 6.3%.

On Tuesday, the S&P CoreLogic Case-Shiller 20-city home price index released showed that prices shot up in October. Prices for November have yet to be released.