Pending home sales, a forward-looking indicator of the real estate market based on contract signings, increased slightly in the northeastern United States in November.
But the government shutdown could take away gains in the housing market, a national real estate group said.
The National Association of Realtors, which released its monthly pending home sales index on Dec. 28, said the November numbers, which show most of the rest of the country in a downward slide, do not yet reflect the current favorable mortgage conditions. It said the real estate market is expected to see solid growth long term.
Nearer term, however, the association expects the government shutdown to slow home sales and economic growth.
“Unlike past government shutdowns, with this present closure, flood insurance is not available,” said Lawrence Yun, chief economist with the association, said in a statement.
“That means that roughly 40,000 homes per month may go unsold because purchasing a home requires flood insurance in those affected areas,” he said. “The longer the shutdown means fewer homes sold and slower economic growth.”
The index, which does not include a state-by-state breakdown, showed that contract signings in the Northeast rose 2.7 percent to 95.1 in November, compared with October. However, they are 3.5 percent below last November.
Nationwide, contract signings decreased 0.7 percent to 101.4 in November, compared with 102.1 in October. Comparing this November to last November, the downturn was more dramatic at 7.7 percent nationwide.
“The latest decline in contract signings implies more short-term pullback in the housing sector and does not yet capture the impact of recent favorable conditions of mortgage rates,” he said.
Yun added that while pending contracts have reached their lowest mark since 2014, there is solid growth potential for the long term.
“Home sales in 2018 look to close out the year with 5.3 million home sales, which would be similar to that experienced in the year 2000,” he said. “But given the 17 million more jobs now compared to the turn of the century, the home sales are clearly underperforming today. That also means there is steady longer-term growth potential.”