Pending home sales flat in November despite drop in mortgage rates

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The numbers: Pending home sales were flat in November compared with the previous month, according to the monthly index released Thursday by the National Association of Realtors (NAR).

The Pending Home Sales Index remained at 71.6 in November from the prior month.

Economists were expecting the index to rise 1% in November, according to a survey by the Wall Street Journal.

Year-on-year, pending home sales are down 5.2%.

Key details: Sales were up in the Northeast, Midwest and West in November but dropped in the South.

Big picture: Pending home sales tend to lead existing home sales by a month or two. They have been on a downward trend this year.

With mortgage rates having declined over the past two months, economists see a modest rebound in home sales ahead.

This could cause housing inflation to remain elevated, complicating the Fed’s job to get inflation down to 2%, said Torsten Slock, chief economist at Apollo Global Management.

What the NAR said: “Although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings,” said Lawrence Yun, NAR chief economist, in a statement along with the data.

Market reaction: Stocks
DJIA

SPX
opened higher on Thursday. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
rose to 3.84%.



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