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US pending home sales inch up in December

By CHRISTOPHER S. RUGABER
Created: 01/28/2016 11:25 AM

WASHINGTON (AP) — The number of people signing contracts to purchase homes managed to inch up last month, thanks to unseasonably warm weather in the Northeast.

The National Association of Realtors said Thursday that its seasonally adjusted pending home sales index crept up 0.1 percent to 106.8. Signed contracts jumped 6.1 percent in the Northeast, while they declined in the other three major U.S. regions.

The tiny bump suggests home sales may plateau this year after a solid increase in 2015. Rising home prices and a lack of available homes for sale are frustrating many would-be buyers.

Last month was one of the warmest Decembers on record on the East Coast. Pending sales are a barometer of future purchases. A lag of a month or two usually exists between a contract and a completed sale.

Solid job gains and low mortgage rates have encouraged more Americans to take the plunge and buy houses. Sales of existing homes rose 6.5 percent last year to 5.26 million. That was the highest level since 2006.

New home sales also surged last year, up 14.5 percent to 501,000. Still, that is below the long-run historical average of 655,000.

Yet the inventory of available homes remains low. The number of existing homes for sale fell 3.8 percent in December from a year ago, the Realtors said last week.

The tight supply is pushing up prices faster than average incomes, which is making it harder for many Americans to afford a home.

Home prices rose 5.8 percent in November from a year earlier, according to the Standard & Poor's/Case-Shiller 20-city index. Nationwide, the index is nearing its pre-recession peak, and prices have fully recovered in four metro areas.

As a result, the Realtors predict that sales will rise just 1.5 percent this year to 5.34 million.

(Copyright 2016 by The Associated Press. All Rights Reserved.)

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