Pending home sales in November were identical to those in October, according to this month’s report from the National Association of REALTORS® (NAR). The Northeast, Midwest and West posted monthly gains in transactions while the South recorded a loss. All four U.S. regions registered year-over-year declines in transactions.
The Pending Home Sales Index (PHSI)—a forward-looking indicator of home sales based on contract signings stayed— at 71.6 in November. Year over year, pending transactions were down 5.2%. An index of 100 is equal to the level of contract activity in 2001, NAR said.
“Although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings,” said Lawrence Yun, NAR chief economist.
Pending home sales regional breakdown
The Northeast PHSI rose 0.8% from last month to 64.4, a drop of 6.4% from November 2022. The Midwest index increased 0.5% to 76.2 in November, down 2.2% from one year ago.
The South PHSI declined 2.3% to 83.2 in November, decreasing 6.5% from the prior year. The West index climbed 4.2% in November to 54.0, falling 4.9% from November 2022.
“With mortgage rates falling further in December—leading to savings of around $300 per month from the recent cyclical peak in rates—home sales will improve in 2024,” Yun added.
Realtor.com Chief Economist Danielle Hale, commented:
“Pending home sales continued to trail below year-ago levels, but as mortgage rates retreated from multi-decade highs in October, the index steadied in November at 71.6, tying an upwardly revised October reading. New home sales, which are also based on contract signings, fell in November, but remained above the previous year’s levels. Buyers over the last year have gravitated toward new construction as existing home supply has remained limited and builders are willing to incentivize purchases with lower rates. A pickup in new listing activity among existing homes, which drove overall inventory up in November, paired with the drop in mortgage rates to interest buyers in existing homes and stabilize pending sales activity.
“Regionally, pending home sales were down in all parts of the country compared to one year ago. Month-to-month gains were observed in the Northeast (+0.8%), Midwest (+0.5%), and West (+4.2%) while the South recorded a 2.3% decline in November.
“Pending home sales or contract signings measure the earliest formal step in the home sale transaction, namely, the point when a buyer and seller have agreed on the price and terms. Pending home sales tend to lead existing home sales by roughly one-to-two months. Today’s data signal that home sales activity could register better than expected in Realtor.com’s 2024 Housing Forecast if mortgage rates are able to hold on to the improvement garnered in the last two months, which has been faster than anticipated. With home prices likely to remain high, mortgage rates will be an important determinant of both affordability and overall activity. Meanwhile, households not ready to wade into the purchase market continue to benefit from improved leasing conditions. The national median rent fell again in November, marking the seventh month of annual decline,” Hale concluded.
Key takeaways
- Pending home sales in November remained the same as one month ago.
- Month over month, contract signings grew in the Northeast, Midwest and West but they contracted in the South.
- Pending home sales dropped in all four U.S. regions compared to one year ago.
