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A measure of contract signings for the purchase of previously owned U.S. homes unexpectedly increased in November after surging a month earlier, according to data released Wednesday by the National Association of Realtors.

Highlights of Pending Home Sales (November)

Index rose 0.2% m/m (est. 0.4% drop) after 3.5% increase that was the largest since February  Gauge increased 0.6% y/y on unadjusted basis after rising 1.2%

Key Takeaways

The increase in contract signings indicates previously owned home sales, tabulated when a deal closes, will stay steady in coming months after climbing in November to an almost 11-year high. Robust employment and cheap borrowing costs are underpinning the housing recovery. Nonetheless, lean inventory remains a hurdle for the market as it’s keeping home prices rising faster than income growth.

Official’s Views

“The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear,” Lawrence Yun, NAR’s chief economist, said in a statement. “However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust.”

Other Details

Purchases advanced 4.1% in the Northeast and 0.4% in the Midwest Contract signings dropped 1.8% in the West and fell 0.4% in the South Economists consider pending sales a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a deal closes, typically a month or two later.

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