Purchase contracts for previously owned homes in the United States rose more in November than markets expected, continuing its positive trajectory for the fourth consecutive month. A report from the National Association of Realtors showed that the Pending Home Sales Index - which is based on signed contracts - rose 2.2% to 79, the highest level since February 2023, compared to 77.3 in October.
National Association of Realtors. The performance exceeded market expectations of an increase of just 0.9%, after contracts had risen by 1.8% in October.
Market expectations were for an increase of just 0.9%.
Year-on-year and regional improvement in sales
Year-over-year, pending home sales jumped 6.9%. Three major regions, the Midwest, South and West, saw monthly increases in purchase contracts, while sales declined in the Northeast. But all four regions posted notable year-over-year gains.
The Impact of Improving Real Estate Inventory
The rise in purchase contracts in November coincided with an increase in existing home completions for the second consecutive month. According to a previous National Association of Realtors report, the inventory of homes for sale increased by 18% compared to the same period a year earlier.
Buyers" position in the face of high mortgage rates
Lawrence Yun, chief economist for the National Association of Realtors, said consumers are beginning to adjust their expectations for mortgage rates, taking advantage of more options in the market. Yun noted that average mortgage rates have exceeded 6% over the past two years, prompting buyers to negotiate more flexibly as the market shifts from being a seller's market to a buyer's market.
Interest rates and their impact on the market
Despite interest rate cuts by the Federal Reserve since September, the interest rate on 30-year fixed-rate mortgages rose to 6.85%, its highest level since July. This comes as the 10-year U.S. Treasury bond has risen nearly a percentage point since September, weighed down by investor concerns about the president-elect's economic policies.
With mortgage rates continuing to rise and real estate inventory improving, the U.S. real estate market appears to be heading toward greater stability, supported by buyers' ability to adjust to economic changes.
With mortgage rates continuing to rise and real estate inventory improving, the U.S. real estate market appears to be heading toward greater stability, supported by buyers' ability to adjust to economic changes.
