The latest report on pending home sales from the National Association of Realtors (NAR) came in ahead of expectations on Monday.
The measure of single family homes, co-ops, and condos with contracts signed increased by 1.6% for the month of December, more than the 1.1% gain expected by economists. This was an improvement from the 2.5% drop in November.
“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,” said NAR chief economist Lawrence Yun. “Sales will struggle to build on last year’s strong pace if inventory conditions don’t improve.”
According to Yun, the market has become bifurcated with sales of homes that are more expensive increasing while cheaper homes are seeing sales decline.
“Last month, sales were up around 10 per cent compared to December 2015 for homes sold at or above $250,000, while homes sold between $100,000 and $250,000 only increased 2.3 per cent,” said the release. “Meanwhile, sales of homes under $100,000 were down 11.6 per cent compared to a year ago.”