Pending Home Sales on the Rise
Pending Home Sales on the Rise
Pending home sales jumped 8.3% from November to December as mortgage rates continued to decline, the National Association of REALTORS® said, citing its Pending Home Sales Index.
Pending sales, in which the contract has been signed but the transaction has not closed, are considered a leading indicator and generally precede existing-home sales by a month or two. Year over year, sales were up 1.3%.
“The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices,” NAR Chief Economist Lawrence Yun said in a press release. “Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.”
The monthly increase was the largest one since 2020 and was well ahead of the consensus estimate of a 2% gain, First American Deputy Chief Economist Odeta Kushi said in a release.
“Consensus projections always seemed on the low side given what we’ve seen with mortgage applications, another leading indicator of sales activity,” Kushi added. “Average mortgage applications in December increased nearly 8% compared with the previous month, and so far in the month of January have increased approximately 10% compared with December. A simple analysis based on the historical relationship between mortgage applications and existing-home sales indicates that existing-home sales should accelerate.”
The better-than-expected increase follows similar outperformance in December new-home sales, which jumped 8% to 664,000, compared to the consensus expectation of 649,000.
Regionally, pending sales were up in the West, South and Midwest, with big month-over-month increases in the West and South, while sales declined in the Northeast.
“Reading between the numbers on pending home sales shows that many American consumers emerged from the pandemic with strong credit scores and remain in a good position to buy a home,”CoreLogic Chief Economist Selma Hepp told Agent Publishing. “However, they are also aware that market fundamentals make it somewhat of a challenge to purchase. Prices remain strong and that won’t change, recent reductions in the mortgage interest rates, however, are helping to drive the desire to buy.”
Looking ahead, NAR expects existing-home sales to rise 13% year-over-year in 2024 and another 15.8% in 2025. The association also expects the median home price to rise 1.4% to $395,100 in 2024, and then increase 2.6% to $405,200 in 2025. Finally, NAR expects the Fed to cut rates four times this year, with the 30-year fixed rate ranging between 6% and 7% for most of the year.
Pending-home sales rose 0.9% from June to July, the second monthly increase in a row and an indication that sales could improve after falling for much of the year, the National Association of REALTORS® said, citing its Pending Home Sales Index.
Pending sales, in which the contract has been signed but the transaction has not closed, are considered a leading indicator and generally precede existing-home sales by a month or two. Year over year, sales were down 14%.
“The small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple home buying offers,” NAR Chief Economist Lawrence Yun said in a press release. “Jobs are being added and, thereby, enlarging the pool of prospective home buyers. However, rising mortgage rates and limited inventory have temporarily hindered the possibility of buying for many.”
Regionally, pending sales were up monthly in the South and West and down in the Northeast and Midwest. All regions experienced annual declines.
First American Chief Economist Mark Fleming called July’s rise in sales a pleasant surprise but cautioned that transactions likely took a hit this month due to recent interest rate increases.
“Likely not out of the woods yet,” Fleming said. “According to our analysis, we were in housing recession between May and November last year, briefly came out of recession between December and April of this year but have since dipped back in to housing recession this summer as rates have increased and sales volume dipped lower again.”
Pending-home sales post surprise increase in May
by John Yellig June 27, 2022
Pending-home sales unexpectedly rose in May, breaking a six-month streak of declines, the National Association of REALTORS® reported, citing its Pending Home Sales Index.
Pending Home Sales Rise
Despite the monthly gain, the housing market is “clearly undergoing a transition” because of higher mortgage rates, NAR chief economist Lawrence Yun said.
Based on the median single-family home price and a 10% down payment, the average monthly mortgage payment has increased by about $800 since the beginning of the year due to increased mortgage rates, which have climbed by 2.5 percentage points during that time, NAR said.
“Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy,” Yun added. “The better way to balance the market is through increased supply, which also helps the broader economy.”
First American economist Ksenia Potapov concurred.
“Declining affordability is weighing on homebuyers, but demographic headwinds will continue to drive demand,” she said. “The bigger problem may be the ongoing lack of housing supply. Existing homes make up approximately 90% of inventory, but existing homeowners are staying put. … Fewer existing homeowners selling means fewer homes for sale and, ultimately, fewer sales.”
Two of the four geographic regions saw decreases in contract activity from the previous month, led by the West, with a 5% drop, and followed by the Midwest, with a 1.7% decline. Pending sales jumped 15.4% in the Northeast and inched 0.2% higher in the South.
“The largest decline in contract activity was observed in the West region, where homes are the most expensive,” Yun said. “This further indicates the growing need to increase supply to tame home-price growth and improve the chances of ownership for potential homebuyers.”
Pending-home sales surged 7.5% on a monthly basis in October after falling 2.3% in September, the National Association of REALTORS® reported, citing its Pending Home Sales Index.
Year over year, contract signings were down 1.4%, according to a press release.
“Motivated by fast-rising apartment rents and the anticipated increase in mortgage rates, consumers that are on strong financial footing are signing contracts to purchase a home sooner rather than later,” NAR chief economist Lawrence Yun said, noting that October’s strong numbers indicate total existing-home sales in 2021 will exceed six million, representing the best performance in 15 years. “This solid buying is a testament to demand still being relatively high, as it is occurring during a time when inventory is still markedly low.”
All four geographic regions saw increases in contract activity, led by the Midwest, which clocked an 11.8% rise from September, and the South, where signed contracts rose 8%. Pending transactions climbed 6.9% in the Northeast and 2.1% in the West.
Compared to last year, the Northeast had the largest drop in the PHSI, with a 10% decrease, followed by the West, with a 6.2% slide. The Midwest and South saw increases of 5.1% and 0.6%, respectively.
“Even as rates increased in October, the housing market remained a competitive sellers’ market,” First American Deputy Chief Economist Odeta Kushi said. “Demand remains high against a very limited number of homes for sale. A high velocity of sales, as indicated by lower days on market, explains a housing market characterized by higher sales and lower inventory.”
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A decline in new home listings has had little impact on the market as far as demand is concerned, according to a recent Redfin report.
Hefty homebuying demand coupled with an inventory shortage has caused asking prices to surge. As a result, the end of August saw a 6% increase in pending sales from a year earlier, with home prices up 14%.
The report, citing data from a four-week period ending Sept. 5, states that the median home sales price rose 14% year over year to $358,250. In addition, prices on new listings rose 10% from September 2020 to a median of $353,500.
“More homes were listed this summer, but they were quickly snatched up by homebuyers even as bidding wars have become more rare,” Redfin Lead Economist Taylor Marr said in a press release. “The market hasn’t cooled off any further than it usually does this time of year, and we expect homebuying demand to remain strong through the fall.”
The report noted that September’s active listings fell 23% from 2020. This was a 3% decrease from the 2021 peak hit during the four-week period ending Aug. 8.
Nearly half (47%) of homes that went under contract had an accepted offer within the first two weeks on the market, up from 43% in September 2020 but down 9 percentage points since its peak in late March 2021.
The report shows that homes were on the market for a median of 19 days before selling.
On average, 4.9% of homes for sale each week saw a price drop, up 0.8% from a year ago and the highest level since the four-week period ending Oct. 13, 2019.
According to the report, 50% of homes sold above listing price. While this was up from 33% in 2020, the measure has been falling since the four-week period ending July 11, when it peaked at 55%.
The average home sold for 1.4% above its asking price, down 0.9% from its peak in July and up 2.1% from a year earlier.
The report found a 0.2% week-over-week decrease in mortgage applications, with 30-year mortgage rates sitting flat at 2.87% for the week ending Sept. 2.
WASHINGTON — The number of buyers who agreed to purchase previously occupied homes rose sharply in February, far exceeding expectations, in a sign that the housing market may be coming back from the winter doldrums.
The National Association of Realtors said Monday its seasonally adjusted index of sales agreements rose 8.2 percent from January to a February reading of 97.6. January’s reading was revised slightly downward to 90.2.
The report “may signal the early stages of a second surge of home sales this spring,” said Lawrence Yun, the trade group’s chief economist
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