Despite interest rates reaching their lowest level of 2014, pending home sales fell 3.7% in December compared to November, according to the National Association of Realtors (NAR).
Still, pending home sales were 6.1% above where they were in December 2013.
Lawrence Yun, chief economist for NAR, says fewer homes available for sale and a slight acceleration in prices likely led to December's decline in contract signings.
‘Total inventory fell in December for the first time in 16 months, resulting in fewer choices for buyers and a modest uptick in price growth in markets throughout the country,’ Yun says in a release. ‘With interest rates at lows not seen since early 2013, the strength in existing sales in upcoming months will largely depend on the willingness of current homeowners to realize their equity gains from the past couple years and trade up.’
‘More jobs, increasing consumer confidence, less-expensive mortgage insurance and new low down payment programs coming into the marketplace will likely lead to more demand from first-time buyers,’ he adds.
Pending home sales fell 7.5% in the Northeast, 4.6% in the West, 2.8% in the Midwest and 2.6% in the South, month over month. Still, all those regions saw pending home sales above their year-ago levels.
NAR forecasts that total existing-home sales will reach about 5.26 million units this year, an increase of 6.6% from 2014.
It is also forecasting that home prices will rise between 4% and 5%.
In 2014, existing-home sales decreased 3.1% compared to 2013 and prices rose 5.8%, according to the firm's research.