Pending home sales up 1.1% nationwide, reflecting difficult mortgage rate environment
Pending home sales bounced back from August’s precipitous drop by posting a positive gain in September, rising 1.1%. This is according to numbers released by the National Association of Realtors® (NAR). Contract activity was up in three of the four regions, though year-over-year numbers were down nationwide by 11%.
This was despite significant headwinds in terms of home prices and mortgage rates, which have both been trending higher for months. "Despite the slight gain, pending contracts remain at historically low levels due to the highest mortgage rates in 20 years," said Lawrence Yun, NAR chief economist. "Furthermore, inventory remains tight, which hinders sales but keeps home prices elevated."
These numbers are compiled using NAR’s Pending Home Sales Index, a forward-looking measure of sales based on contract signings. An index of 100 equates to the level of activity in 2001, and September’s nationwide index increased to 72.6, up from 71.8 in August. Here’s a look at each region:
- Northeast: up 0.8% to 63.1, down 12.7% from September 2022
- Midwest: up 4.1% to 74.3, down 9.2% from September 2022
- South: up 0.7% to 87.1, down 10.7% from September 2022
- West: down 1.8% to 55.3, down 12.9% from September 2022
Looking even further ahead
In this report, NAR made some forecasts about what to expect this year and next that was illuminating. Overall, they see an improved economic situation and housing market in 2024.
NAR predicts:
- 30-year fixed mortgage
- 2023: Average 6.9%
- 2024: Average 6.3%
- Existing-home sales
- 2023: Decrease 17.5%
- 2024: Increase 13.5%
- National median existing-home prices
- 2023: Increase 0.1%
- 2024: Increase 0.7%
- Housing starts
- 2023: Decrease 10.4%
- 2024: Increase 6.5%
- Newly constructed home sales
- 2023: Increase 4.5%
- 2024: Increase 19.4%
"Because of homebuilders' ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates. This underscores the importance of increased inventory in helping to get the overall housing market moving," said Yun.
Mortgage rates seemed to reach a peak in the last week, before coming down. Hopefully they will keep coming down, which is why working with a local loan officer can help you make the most of current market conditions.
Source: https://www.nar.realtor/newsroom/pending-home-sales-grew-1-1-in-september