Pending home sales dropped in November as many markets continued to face a limited supply of homes for sale. Economists, however, are optimistic for more opportunities for buyers in the new year.

The National Association of REALTORS®’ Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—dropped 2.2% in November, reversing from last month’s increase. All major regions of the U.S. posted declines last month. Pending home sales are also down 2.7% compared to a year ago.

Lawrence Yun, NAR’s chief economist, attributes November’s dip in contract signings to the low housing supply and to home buyers who may be growing more hesitant due to rapidly increasing home prices. The omicron variant may also be creating more hesitancy in the housing market, Yun adds.

Still, he says buyers’ overall appetite for housing remains high. Homes placed on the market go on sale from listed status to under contract in about 18 days, he says.

“Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply chain disruptions and labor shortages this year,” Yun says.“These aspects, along with the exorbitant prices and a lack of available homes, have created a much tougher buying season.”

Yun expects more openings in the housing market in the new year. “While I expect neither a price reduction nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability,” he adds.