Pending home sales increased in December for the first time since May 2022, according to data from the National Association of Realtors (NAR).
The Pending Home Sales Index (PHSI), NAR”™s forward-looking indicator of home sales based on contract signings, increased from November by 2.5% to 76.9 in December, although on a year-over-year basis pending transactions dropped by 33.8%. An index of 100 is equal to the level of contract activity in 2001. Regionally, pending home sales were down in the Northeast and Midwest but up in the South and the West.
“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 new normal for mortgage rates will likely be in the 5.5% to 6.5% range. Job gains will steadily become important in driving local home-sales markets ”“ the South, in particular, is set to outperform the rest of the country, thanks primarily to better job market conditions in this part of the country compared to other regions.”
