Pending home sales surge 8.3% in December
December saw a stark increase in pending home sales, with an 8.3% increase in contract activity from November, and a 1.3% increase from December 2022. Not a bad way to send off the year.
Three out of the four regions saw an increase, according to the Pending Home Sale Index released by the National Association of Realtors® (NAR). Only the Northeast posted a negative number in December.
"The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices," said Lawrence Yun, NAR chief economist. "Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand."
The Pending Home Sales Index is a forward-looking measure of sales based on contract signings. An index of 100 equates to the level of activity in 2001. December measured at 77.3, which is quite a turnaround from recent months. November and October’s nationwide index came in tied at 71.4, lowest point the NAR has recorded since it began measuring pending home sales activity in 2001. The index was 72.6 in September and 71.8 in August.
If these numbers are encouraging you to get into the market in 2024, start by getting preapproved.
Looking ahead to 2024
Also contained in this report, the NAR released updated projections for the upcoming year. "Home sales are projected to rise significantly in each of the next two years as the market steadily returns to normal sales activity," predicts Yun.
Some highlights of their forecast include:
- Projecting a 13% increase in existing-home sales in 2024 (from 2023) to 4.62 million
- Also forecasting a 15.8% increase in 2025 (from 2024) to 5.35 million
- A 1.4% increase in annual median home price, to $395,000, in 2024
- A further increase to $405,200 in 2025
- An expectation that the Federal Reserve will cut interest rates four times this year
- Foresee that mortgage rates will stay in the 6% to 7% range
Regional breakdown
Here’s how the numbers broke out by region:
- Northeast: down 3.0% to 62.3, down 3.9% from December 2022
- Midwest: up 5.6% to 80.5, up 4.3% from December 2022
- South: up 11.9% to 93.0, up 1.5% from December 2022
- West: up 14.0% to 61.0, up 1.5% from December 2022
Mortgage rates dropped during December, which is probably one reason why pending home sales saw such an uptick. Working with a local loan officer can help you make the most of current market conditions.
This remains a difficult market for first-time homebuyers, but there are some ways for them to give themselves a better chance to get a home.
Source: https://www.nar.realtor/newsroom/pending-home-sales-climbed-8-3-in-december
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