The last quarter of 2017 saw pending home sales rise in each of its three months but the year ahead is expected to see moderation
The last quarter of 2017 saw pending home sales rise in each of its three months but the year ahead is expected to see moderation.
The National Association of Realtors says that its Pending Home Sales Index was up 0.5% in December from the previous month to a reading of 110.1. That also put the last figure for the year 0.5% above that of December 2016.
"Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018," said NAR chief economist Lawrence Yun. "Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now."
Tight inventory will continue to add upward pressure on prices though, especially at the lower end of the market.
Moderation after short-term jump
The tax reforms are predicted to weigh on pending sales in 2018 and NAR is forecasting that the full-year rise will moderate to 0.5% (5.54 million) from 1.1% in 2017 (5.51 million).
"In the short term, the larger paychecks most households will see from the tax cuts may give prospective buyers the ability to save for a larger down payment this year, and the healthy labor economy and job market will continue to boost demand," said Yun. "However, there's no doubt the nation's most expensive markets with high property taxes are going to be adversely impacted by the tax law."
While it’s not known how severe the impact of the tax code will be, Yun says that sellers in the upper end of the market who want to trade down or move to a less expensive area may be forced to set more realistic prices.
The National Association of Realtors says that its Pending Home Sales Index was up 0.5% in December from the previous month to a reading of 110.1. That also put the last figure for the year 0.5% above that of December 2016.
"Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018," said NAR chief economist Lawrence Yun. "Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now."
Tight inventory will continue to add upward pressure on prices though, especially at the lower end of the market.
Moderation after short-term jump
The tax reforms are predicted to weigh on pending sales in 2018 and NAR is forecasting that the full-year rise will moderate to 0.5% (5.54 million) from 1.1% in 2017 (5.51 million).
"In the short term, the larger paychecks most households will see from the tax cuts may give prospective buyers the ability to save for a larger down payment this year, and the healthy labor economy and job market will continue to boost demand," said Yun. "However, there's no doubt the nation's most expensive markets with high property taxes are going to be adversely impacted by the tax law."
While it’s not known how severe the impact of the tax code will be, Yun says that sellers in the upper end of the market who want to trade down or move to a less expensive area may be forced to set more realistic prices.
