Rebound in sales shows buyers are returning to the market, expert says
Pending home sales saw a significant improvement in December, ending a streak of declines that lasted for half a year due to the surge in mortgage rates.
According to the National Association of Realtors, the pending home sales index (PHSI) increased for the first time in six months, up 2.5% to 76.9 in December. However, home sales based on contract signings remained 33.8% below last year’s levels.
“After declining for six months straight, pending home sales increased in December,” said Kate Wood, home expert at NerdWallet. “Though still down year-over-year, this slight improvement shows what a strong factor mortgage interest rates were in depressing home sales in 2022. The rise in contract signings shows that buyers began to return once mortgage rates dropped from their fall peak.”
“This recent low point in home sales activity is likely over,” said NAR chief economist Lawrence Yun. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”
The average 30-year mortgage rate fell again last week, down two basis points to 6.13%. Freddie Mac chief economist Sam Khater noted that home purchase demand has started to thaw from its months-long freeze as rates continue to edge down.
“Potential homebuyers remain sensitive to changes in mortgage rates, but ample demand remains, fueled by first-time homebuyers,” Khater said.
Stay updated on the latest developments in the US housing market and learn more about what it means for the mortgage industry by subscribing to our FREE daily newsletter.
