Housing Market Sees Fourth Consecutive Month of Growth
The US housing market is showing signs of resilience, with pending home sales rising more than expected in November. This marks the fourth straight month of gains, as buyers adapt to the new reality of higher mortgage rates and take advantage of improved inventory.
Buyers Adjust to Higher Mortgage Rates
According to the National Association of Realtors (NAR), its Pending Home Sales Index, based on signed contracts, increased 2.2% last month to 79.0, the highest since February 2023. This surpasses economists’ forecasts of a 0.9% rise. On a year-over-year basis, pending home sales jumped 6.9%.
Regional Performance
The Midwest, South, and West regions saw monthly increases in contract signings, while the Northeast experienced a decline. However, all four regions posted annual gains.
Inventory Levels Improve
The increase in contract signings is supported by a rise in existing home purchase completions last month, as reported by NAR. The inventory of homes for sale in November was up by nearly 18% from a year earlier, giving buyers more options and negotiating power.
Shifting Market Dynamics
“Mortgage rates have averaged above 6% for the past 24 months, and buyers are no longer waiting for or expecting rates to fall substantially,” said Lawrence Yun, the NAR’s chief economist. “With more available inventory, buyers are in a better position to negotiate as the market shifts away from a seller’s market.”
Mortgage Rates Remain Elevated
The rate on popular 30-year-fixed-rate mortgages has climbed in the past two months to 6.85%, according to Freddie Mac. This is largely due to the 10-year U.S. Treasury note, which has risen by roughly a percentage point since September, driven by concerns about inflation and the impact of policy changes.
A New Era for Homebuyers
As the housing market continues to evolve, buyers are adapting to the new reality of higher mortgage rates and taking advantage of improved inventory. With the market shifting in their favor, buyers are regaining control and finding opportunities in the current landscape.
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