Homebuyers Adapt to Higher Mortgage Rates, Driving Pending Sales Up
As the housing market continues to evolve, a recent report from the National Association of Realtors reveals a significant shift in homebuyer behavior. Despite higher mortgage rates, pending sales of US homes have increased for the fourth consecutive month, reaching the highest level since early 2023.
Realigning Expectations
The surge in contract signings, up 2.2% to 79, indicates that homebuyers have recalibrated their expectations regarding mortgage rates. According to NAR Chief Economist Lawrence Yun, “Buyers are no longer waiting for or expecting mortgage rates to fall substantially.” Instead, they’re taking advantage of the more available inventory and adapting to the new reality of higher borrowing costs.
Regional Variations
The South led the charge, with a 5.2% monthly increase in pending sales. The West and Midwest also saw smaller advances, while activity declined in the Northeast. On a year-over-year basis, contract signings climbed 5.6% before adjusting for seasonality.
Housing Affordability Remains a Concern
Despite the uptick in pending sales, housing affordability in the US remains under strain. High prices and elevated borrowing costs continue to pose a challenge for homebuyers. The Federal Reserve’s recent signal to slow the pace of interest-rate reductions in 2025 suggests that relief may not be imminent.
A New Normal for Homebuyers
As the housing market adjusts to higher mortgage rates, homebuyers are being forced to reassess their priorities. With prices and borrowing costs unlikely to drop significantly in the near future, buyers are learning to navigate this new landscape. The latest pending sales data suggests that, despite the challenges, homebuyers are finding ways to make it work.
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