Pending home sales dropped 0.7% to an index reading of 101.4 in November, after an unrevised 2.6% decline to 102.1 in October, according to a report released Friday by the National Association of Realtors.
An index of 100 is equal to the average level of contract activity during 2001.
Year-over-year the pending homes sales index decreased 7.7% from last November, when the index was 109.8. This is the eleventh consecutive month sales have dropped on an annual basis.
Economists polled by IFR Markets predicted the index would be 102.6.
Regionally, pending sales were mixed. Northeast sales grew 2.7% to 95.1 and sales slid 2.7% in the South to 115.7. In the Midwest sales declined 2.3% to 98.1, while sales grew 2.8% in the West to 87.2.
“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,” NAR Chief Economist Lawrence Yun said.
Pending contracts are at their lowest mark since 2014, NAR said.
Affordability remains a concern and the government shutdown will also affect housing. “Unlike past government shutdowns, with this present closure, flood insurance is not available. That means that roughly 40,000 homes per month may go unsold because purchasing a home requires flood insurance in those affected areas,” Yun said. “The longer the shutdown means fewer homes sold and slower economic growth.”