Realtors report pending home sales climbed 8.3 percent in December

WASHINGTON — Pending home sales in December elevated 8.3 percent, according to the National Association of Realtors. The Midwest, South and West posted monthly gains in transactions, while the Northeast recorded a loss. The Midwest, South and West also registered year-over-year increases, while the Northeast had a decline in transactions compared to last year.

The Pending Home Sales Index — a forward-looking indicator of home sales based on contract signings — increased to 77.3 in December. Year over year, pending transactions were up 1.3 percent. An index of 100 is equal to the level of contract activity in 2001.

“The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices,” said Lawrence Yun, NAR chief economist. “Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.”

NAR QUARTERLY U.S. ECONOMIC FORECAST

NAR also released its Economic Outlook as of January 2024, projecting a 13 percent increase in existing-home sales in 2024 (from 2023) to 4.62 million and a 15.8 percent increase in 2025 (from 2024) to 5.35 million. The annual median home price is expected to rise 1.4 percent to $395,100 in 2024, then increase 2.6 percent to $405,200 in 2025.

“Home sales are projected to rise significantly in each of the next two years as the market steadily returns to normal sales activity,” Yun added.

The Federal Reserve will likely cut interest rates four times. The 30-year fixed mortgage rate will bounce along the 6 percent to 7 percent range for most of the year.

NAR forecasts that as a result of sizable growth in apartment construction over the past three years, rent growth will calm, which will help bring consumer price inflation to less than 3 percent in 2024.

PENDING HOME SALES REGIONAL BREAKDOWN

The Northeast PHSI dropped 3.0 percent from last month to 62.3, a decline of 3.9 percent from December 2022. The Midwest index increased 5.6 percent to 80.5 in December, up 4.3 percent from one year ago.

The South PHSI jumped 11.9 percent to 93.0 in December, rising 1.5 percent from the prior year. The West index surged 14.0 percent in December to 61.0, up 1.5 percent from December 2022.