Pending Home Sales Post Unexpected Drop in November

The number of homes tentatively sold across the U.S. fell in November, a sign the housing market hit a rough patch this winter after strengthening earlier in the year. Pending home sales, measuring contracts before they become final, slipped 0.9% in November from a month earlier to a reading of 106.9, the National Association of Realtors said Wednesday. An index of 100 is equal to the average level of contract activity during 2001, which the NAR considers a "normal," or balanced, market for the current U.S. population. Economists surveyed by The Wall Street Journal expected sales to rise 0.5% last month. Pending sales offer a forecast of the housing market because they measure purchases at the time a contract is signed rather than at closing. Contracts typically take weeks to become final, and some are ultimately canceled. Pending sales have slipped for three of the past four months but are up 2.7% over the past year, suggesting halting progress in the housing market. Lawrence Yun, the NAR's chief economist, attributed recent troubles in the housing market to a run-up in home prices and a persistent shortage in for-sale homes that have limited buyer options. "Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months despite low mortgage rates and solid job gains," Mr. Yun said in a statement. Other signs have heightened concerns. The NAR reported earlier this month that its more closely watched index--final sales of existing homes, which measure purchases after closing-- slid 10.5% in November to an annual rate of 4.76 million, a 19-month low. The NAR pointed to delays caused by new federal rules, along with a tight supply of for-sale homes, as the primary factors. Before last month, the housing sector showed strength, supported by broad job growth across the U.S., a rise in Americans' incomes and wealth, and historically low mortgage rates. Existing-home sales reached an annual pace of 5.58 million this summer, the highest level since late 2009. The housing market faces a test after the Federal Reserve's move this month to raise interest rates for the first time in a decade. Higher mortgage rates could follow, though economists expect any increase to be slow and modest. Mortgage rates remain historically low, averaging 3.96% for a 30-year fixed-rate mortgage last week, according to Freddie Mac. Market conditions vary by region. Monday's report showed pending sales declined 3% in the Northeast and 5.5% in the West last month from the prior month. Sales rose 1% in the Midwest and 1.3% in the South. News Corp, owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.