Pending home sales soared in December, proving that price-sensitive buyers are jumping at the opportunity to lock in sub-7% rates.
NAR’s Pending Home Sales Index rose by 8.3% month-over-month — their biggest increase since 2020 — to a reading of 77.3 in December. An index of 100 is equal to the level of contract activity in 2001.
Year-over-year, they are 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,” 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.”
All four U.S. regions saw declines both month-over-month and year-over-year sales, with the South and West retreating the most.
All regions but the Northeast reported gains both month-over-month and from the same time last year.
Rates have recently stayed put in the mid-6%s, hardly moving any direction, which is good news for buyers after the wild swings of 2023.
“Given this stabilization in rates, potential homebuyers with affordability concerns have jumped off the fence back into the market. Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace,” Freddie Mac Chief Economist Sam Khater noted.
Abby Alwan, a real estate agent in Austin, TX, said inventory she had no luck selling just a few months ago is finally getting attention, and more sellers are entering the market, too.
“I have two listings in the suburbs that six months ago would’ve sat on the market. But all of a sudden, buyers are coming out of the woodwork thanks to lower rates. More folks are looking to have conversations about what they need to do to enter the market now that they’ve seen improvement.”
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