Despite high mortgage rates, buyers are signing contracts in record numbers
The National Association of Realtors (NAR) reported a surge in pending home sales for the fourth consecutive month in November 2024, reaching their highest level since February 2023.
NAR's index of contract signings rose 2.2% to 79, surpassing economist expectations of a 0.8% increase according to Bloomberg's survey.
The South region outpaced the rest of the national increase with 5.2% monthly gains in pending sales, while other regions showed similar positive growth in the West and Midwest regions.
The Northeast, however, reflected a decline in activity. Nationally, prior to seasonal adjustment, year-over-year contract signings are up by 5.6%.
"Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory," said NAR chief economist Lawrence Yun. "Buyers are no longer waiting for or expecting mortgage rates to fall substantially."
Higher level of pending sales, a leading indicator of existing home sales, aligns with other data indicating continued home purchases at higher levels of mortgage rates.
These pending sales contracts usually lead final sales by one to two months, providing insight into near-term housing market trends.
The housing market still has to grapple with the issue of affordability, considering high home prices and elevated borrowing costs.
The Federal Reserve's recent policy meeting on December 17 to 18 indicated plans for a slower pace of interest rate reductions in 2025, suggesting continued market pressure for homebuyers in the coming months.
What do you think has driven this surge in homebuying activity? Share us your comments below.
