Pending home sales tick up in September
After big declines in August, sales recovered slightly, but “pending contracts remain at historically low levels,” NAR Chief Economist Lawrence Yun noted.
Key points:
- While national pending homes sales logged a small gain in September, sales are down 11% compared to the same period a year ago.
- The Northeast, Midwest and South regions posted increases in sales last month, while pending sales fell in the West.
- NAR researchers predict existing home sales for 2023 will end up at around 4.15 million, representing a 17.5% decrease from last year.
Despite a summer home sales slump — ending with a significant slide in pending home sales in August — there are still some signs of life in the housing market.
According to NAR's latest Pending Home Sales Index — an indicator that gauges the health of the market by looking at the number of homes under contract — there was a small 1.1% gain in September from the month prior.
This comes in the same week as news of increasing new home sales last month.
But compared to the same period a year ago, pending home sales at the national level were off 11%. All four major U.S. regions — the Northeast, Midwest, South and West — witnessed year-over-year declines, though only the West failed to post a small monthly gain in September, while the Midwest saw the biggest monthly improvement.
"Despite the slight gain, pending contracts remain at historically low levels due to the highest mortgage rates in 20 years," Lawrence Yun, NAR's chief economist said in the report. "Furthermore, inventory remains tight, which hinders sales but keeps home prices elevated."
Where the market is headed
Researchers at NAR also offered some predictions for the remainder of the year and into 2024. Yun and team expect existing home sales will end up at around 4.15 million for 2023, representing a 17.5% decrease from last year. They also predict that on a national level, median existing home prices will remain largely stable this year.
But things could start to pick up in 2024: NAR forecasts a 13.5% increase in existing home sales and upward of 4.71 million transactions for the year.
Buyers sidelined by high mortgage interest rates may even get some relief. NAR predicts the 30-year fixed-rate mortgage will average 6.9% for 2023 and drop to an average of 6.3% by the end of next year.
And if mortgage rates drop, buyers and sellers currently frozen out by near-8% rates may be ready to ease back into the market by the spring, Realtor.com Chief Economist Danielle Hale predicts.
Hale said potential sellers may be waiting to "see how the market pans out," and both buyers and sellers are likely to "pull back more severely than in the typical year, hoping for more favorable conditions in the spring."