The National Association of Realtors reports that Pending Home Sales decreased in November by 0.7 percent, which doesn’t sound like much, however, when compared to year over year figures, contract signings dropped 7.7 percent, making November 2018 the 11th month in a row where the number of pending contracts fell.
This means that pending contracts have fallen to their lowest level since 2014.
Existing home sales, or closed transactions for the month of November, followed the same trend. Down 7% overall from last year and for two consecutive months, NAR considers this a good sign. With higher inventory, price appreciation will stabilize and that is good for everyone. Sellers can expect slightly longer Days on Market (DOM) and should take this information into consideration when pricing their home for sale.
All of that, could be signalling a shift in the market.
Many buyers and sellers were affected by the last shift, and while no one is anticipating those kinds of changes, it is smart to look ahead and take all of the indicators into account when selling or purchasing. Thankfully, this is not our first market shift either. With our combined 35 years of experience we will prepare you for them with knowledge and foresight.
The real estate industry moves from ‘buyers market’ to ‘sellers market’ frequently and usually without much fanfare.
A market shift, even a slight one, requires a change in mindset. Rather than pricing for the market you are in and adjusting as it changes, sellers perform better with forward thinking and pricing ahead of the market. The option? Waiting for the local market to tell you when it’s time to reduce or adjust and chasing the market down. It sounds counterintuitive, but pricing ahead of a shift is actually sound advice and is backed up by articles and books written by some of the industries top performers, coaches and leaders. “Shift”, co-authored by Gary Keller, Jay Papasan and Dave Jenks was an incredible resource when it was published in 2009, and remains so today. Aimed specifically at agents, it dives deep into the motivation behind pricing and the science behind it when you apply the correct data.
But what about buyers?
Buyers often get wrapped up in the slight increase in interest rates but it is oftentimes less expensive to buy your own home than rent one over the long term. While interest rates have seen a slight fluctuation, they continue to be relatively low, certainly lower than 10 or 15 years ago. Buying a home was never meant to be a short term investment strategy and adjusting our mindset is vital at this stage of the game. Looking at the information released by NAR above, buyers will ideally have opportunities they didn’t just a few months ago. Longer DOM, and prices stabilizing is good news. Add to that the rise in the FHA, VA and Conventional Loan limits and a new home could just be yours this year!
