Cervone, Deegan & Associates, your real estate resource, is pleased to share that pending home sales have increased as of the end of last year according to the National Association of Realtors. The Pending Home Sales Index (PHSI), the indicator that is based on signed contracts rose 1.6% to 109 as we completed 2016 up from 107.3 the previous month. Factoring in this uptick the index is now 0.3% higher than December of the 2015.
Chief economist, Lawrence Yun has shared that contract activity has ranged across the country in December yet finished the year on a high note as the year came to an end. “Pending sales rebounded (in December) as enough buyers fended off rising mortgage rates and alarmingly low inventory levels1 to sign a contract,” he said. “The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs. Sales will struggle to build on last year’s strong pace if inventory conditions don’t improve.”
Looking forward, home sales are predicted to be at approximately 5.54 million for 2017. This is an increase of 1.7% over last year which displayed the best year of sales since 2006. The median home price for this year is expected to increase by 4%. Comparatively, 2016 had existing home sales rise by 3.8% and prices surge by 5.2%. Yun also expects that housing starts will increase by 7.9% to 1.26 million units.
“Especially if construction-related regulations are relaxed, all eyes will be on the homebuilding industry this year to see if they can finally start making up lost ground on the severe housing shortages impacting much of the country,” added Yun.
In several markets, the Boston and Greater Boston included, it is normal for sales to slow during the holidays and winter months. Inventory can also be more limited with sellers removing their homes from the market only to relist as spring approaches. Overall, the expectations for 2017 are optimistic as we proceed forth into the year.