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By: Detroit Free Press | Photo: Jessica J Trevino

The number of Americans who signed contracts to buy existing homes across the country in November was essentially unchanged from October, suggesting sales are stabilizing after several months of declines. That’s generally good news.

In metro Detroit, sales of homes were up 22% this November compared to a year ago in Wayne, Oakland and Macomb counties, according to a review of property transfers by Bloomfield Township-based Advertising That Works, which tracks home sales.

It’s not strictly an apples-to-apples comparison because the national figure excludes new home sales. Even so, metro Detroit has been considered a hot market this year because of the rebounding auto industry and gains in the overall local and state economies.

The National Association of Realtors said Monday that its seasonally adjusted pending home sales index ticked up to 101.7 from 101.5 in October. The October figure was revised lower from an initial reading of 102.1.

Higher mortgage rates and strong price gains over the past two years have slowed sales. The pending home sales index had fallen for five straight months before November. And completed sales of existing homes fell for three straight months, the Realtors said earlier this month.

There is generally a one- to two-month lag between a signed contract and a completed sale.

The average interest rate on a 30-year mortgage edged higher to 4.48% last week, from 4.47% the previous week. Rates jumped about 1.25 percentage points from May through September, peaking at 4.6%. That increase occurred after Federal Reserve Chairman Ben Bernanke indicated that the Fed would start to slow its bond-buying program before the end of the year.

Earlier this month, the Fed announced it will reduce its $85 billion in monthly bond purchases by $10 billion a month starting in January. The bond purchases are intended to push down longer-term interest rates and encourage more borrowing and spending.

Robert Kavcic, an economist at BMO Capital Markets, said that recent housing market indicators have been mixed. Applications for mortgages to purchase homes fell to a nearly two-year low last week, he said.

Still, “we continue to believe that the U.S. housing market will absorb the upward move in mortgage rates and push higher in 2014, helped by still-attractive affordability, better job growth and improved confidence in the recovery,” Kavcic said.

Despite the recent declines, home resales should reach 5.1 million in 2013, the best total in seven years, the Realtors forecast. That’s 10% higher than 2012’s total of almost 4.7 million. But it’s still below the 5.5 million consistent with a healthy housing market.

The Realtors forecast that sales will remain largely flat in 2014 and then rise to 5.3 million in 2015. Steady job gains should make it easier for more people to buy homes.

Signed contracts rose in the South and West last month, while falling in the Northeast and Midwest.

 

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