Pending Home Sales Rise by 1.3% Year-Over-Year Amid Falling Mortgage Rates

Summary

  • Pending home sales have seen a 1.3% increase on a year-over-year basis.
  • The housing market experiences a positive start this year due to falling mortgage rates and stable home prices.
  • Job additions and income growth play a significant role in housing affordability, with supply being crucial to meet demand.
  • Higher mortgage rates led to record low index figures last year, discouraging home sellers and limiting inventory.
  • Mortgage rates have stabilized in the mid-six percent range, despite reaching a two-decade high of nearly 8% in October.
  • The West and South regions report the highest gains in pending sales, with increases of 14% and 11.9% respectively. The Northeast witnessed a 3% decline.

Year-over-year, pending residence sales demonstrated an uptick of 1.3%. “The real estate market has commenced the year on a strong note, with consumers reaping benefits from declining mortgage rates and leveled home prices,” stated Lawrence Yun, NAR’s chief economist.

“Job expansion and wage growth will significantly enhance housing affordability. However, an escalated supply is quintessential to meet all plausible demand.”

Mortgage Rates and Market Shifts

In the previous year, the index plummeted to unprecedented lows due to increased mortgage rates, which dissuaded homeowners from selling and resulted in inventory and buyer constraints.

Mortgage rates soared to nearly 8% in October, marking a two-decade peak. However, rates have mitigated post the Federal Reserve’s decision to keep its policy benchmark rate unaltered since July. As per Freddie Mac, the week concluding on Jan. 25 saw an upward revision in mortgage rates to 6.69%, though they continued to stabilize in the mid-six percent domain.

Regional Sales Overview

Growth in pending sales was most prominent in the western and southern regions, registering increases of 14% and 11.9% respectively. The northeastern region was the sole area to report a downturn, with a monthly drop of 3% in pending home sales.

Potential Market Impact

Fluctuations in the housing market and mortgage rates may greatly influence forex trading and real estate-related assets. They can provide potential opportunities for strategic investment decision-making in these market sectors.

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