In a miserable year for home sales, sometimes no news is good news.
Following a steep decline in October, pending home sales in the United States remained at a 20-year low in November, according to a report released Thursday.
Meanwhile, the pending home sales index — a forward-looking indicator based on contract signings rather than closings — was down 5.2% from a year ago, monthly data from the National Association of Realtors showed.
The South was the only region in which monthly pending transactions declined in November. Pending sales in the Northeast, Midwest and West gained during the month. But all four regions recorded year-over-year declines in transactions.
“Although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings,” said Lawrence Yun, NAR chief economist.
“With mortgage rates falling further in December – leading to savings of around $300 per month from the recent cyclical peak in rates – home sales will improve in 2024,” Yun added.
Drop in mortgage rates to benefit home sales
As mortgage rates continue to decline with the anticipation of Federal Reserve rate cuts beginning next year, the housing market is set rebound more.
The average 30-year fixed-rate mortgage was 6.67% in the week ending December 21. That’s a decline from the prior week. However, it’s still higher than a year ago.
At the same time, housing inventory remains constrained.
“Buyers over the last year have gravitated toward new construction as existing home supply has remained limited and builders are willing to incentivize purchases with lower rates,” Realtor.com chief economist Danielle Hale said in a statement.
“A pickup in new listing activity among existing homes, which drove overall inventory up in November, paired with the drop in mortgage rates [should] interest buyers in existing homes and improve pending sales activity,” Hale added.
Mortgage rates for the week ending in December 28 are set to be released on Thursday at 12 p.m. ET.
