A gauge of pending U.S. existing-home gross sales rebounded sharply in December to a five-month excessive, suggesting the current drop in mortgage charges helps to stabilize the resale market.
The Nationwide Affiliation of Realtors’ index of contract signings elevated 8.3% to 77.3 after holding at a document low a month earlier, in accordance with knowledge out Friday. Final month’s advance — the biggest since mid-2020 — exceeded all estimates in a Bloomberg survey of economists.
“The housing market is off to a superb begin this yr, as customers profit from falling mortgage charges and secure dwelling costs,” Lawrence Yun, NAR’s chief economist, mentioned in an announcement. “Job additions and revenue development will additional assist with housing affordability, however elevated provide will likely be important to satisfying all potential demand.”
Whereas 30-year fastened mortgage charges stay beneath 7%, a sustained decline is required to encourage extra owners to listing houses which are financed at a lot decrease ranges. Till that develops, a restricted stock of beforehand owned houses will make it tough for the resale market to quickly acquire traction.
A scarcity of listings have additionally labored to maintain existing-home costs elevated. On the identical time, builders have been filling the void with new development. The variety of new homes on the market on the finish of 2023 rose to a greater than one-year excessive, serving to push these costs down.
The pending-home gross sales report is a number one indicator of existing-home gross sales given homes usually go below contract a month or two earlier than they’re offered. These gross sales are anticipated to extend 13% this yr, in accordance with NAR’s financial outlook. They slumped 18.7% in 2023.
The NAR’s report confirmed the index of contract signings for current houses jumped practically 12% within the South, the largest US housing market. That was the biggest advance since June 2020. Pending gross sales additionally surged 14% within the West and climbed 5.6% within the Midwest.
