Pending home sales in November were unchanged compared with October and 5.2% lower than November of last yr, in accordance with the National Association of Realtors.
The reading, which is predicated on signed contracts through the month, is a forward-looking indicator of closed sales in addition to probably the most current take a look at what potential homebuyers are pondering.
Mortgage rates are key on this report, with the common rate on the 30-year fixed mortgage soaring over 8% in mid-October before dropping sharply to 7.5% in the primary week of November, in accordance with Mortgage News Every day. It ended the month around 7.25%.
Analysts had expected the drop to cause a slight gain in pending sales, but apparently it wasn’t enough, given steep home prices and tight supply.
“Although declining mortgage rates didn’t induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a better variety of lockbox openings,” said Lawrence Yun, NAR’s chief economist.
Regionally, pending sales rose 0.8% month over month within the Northeast and 0.5% within the Midwest. Sales made a stronger 4.2% gain within the West — where prices are highest and a drop in mortgage rates would have the most important impact — and fell 2.3% within the South. Pending sales were lower in all regions in November compared with same month in 2022.
Mortgage rates at the moment are solidly within the mid-6% range, but the provision of homes on the market continues to be very low. Builders are ramping up production, but recent homes come at a price premium. Prices for existing homes proceed to rise.
“With mortgage rates falling further in December – resulting in savings of around $300 per thirty days from the recent cyclical peak in rates – home sales will improve in 2024,” Yun added.
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