'Abnormal' Weather, Spiking Prices Hinder U.S. Pending Home Sales in December

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Pending home sales in the U.S. dropped considerably in December, due in some part to abnormal weather, reaching the lowest level in more than two years, according to the National Association of Realtors. 

The Pending Home Sales Index -- based on contract signings and not completed sales -- decreased 8.7 percent to 92.4 in December, from a downwardly revised 101.2 in November. The figure is 8.8 percent lower than the December 2012 reading when it was 101.3, and is at the lowest level since October 2011 when it was 92.2. 

"Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes or making offers," Lawrence Yun, NAR chief economist, said in the report. "Home prices rising faster than income is also giving pause to some potential buyers, while at the same time a lack of inventory means insufficient choice. Although it could take several months for us to get a clearer read on market momentum, job growth and pent-up demand are positive factors."

Last week the NAR reported existing home sales increased in December, bringing the 2013 sales total to the highest level since 2006. 

Today's report shows declines in pending home sales for all four major regions in December. 

The index in the Northeast dropped 10.3 percent to 74.1, and is 5.5 percent below a year ago. In the Midwest, the index fell 6.8 percent to 93.6, lowering 6.9 percent from a year ago. 

In the South, the index declined 8.8 percent to 104.9, also 6.9 percent lower than a year ago. The West market, the most affected by constrained inventory, declined 9.8 percent to 85.7, and is 16 percent lower than December 2012. 

The association forecasts total existing-home sales will reach 5.1 million this year, basically the same as in 2013, with inventory remaining limited in most of the country. 

The national median existing-home price is projected to increase approximately 5.4 percent this year.