Pending home sales rose 1.1% in September, but remain at historically low levels. 

The National Association of Realtors^® indicated that pending sales transactions rose 1.1% over August with the Northeast, Midwest, and South growing, but numbers fell in the West. "Despite the slight gain, pending contracts remain at historically low levels due to the highest mortgage rates in 20 years," said Lawrence Yun, NAR’s Chief Economist. "Furthermore, inventory remains tight, which hinders sales but keeps home prices elevated." The current index stands at 72.6, which is an 11% decline in transactions from this time last year. The NAR forecasts that the 30-year fixed mortgage rate will average 6.9% for 2023 and decrease to an average of 6.3% in 2024, while the unemployment rate will lower to 3.7% in 2023 before increasing to 4.1% in 2024. NAR predicts existing-home sales will decrease 17.5% in 2023, settling at 4.15 million, before rising 13.5%, to 4.71 million in 2024. Compared to last year, national median existing-home prices are projected to remain stable in 2023—edging higher by 0.1% to $386,700, before increasing by 0.7% next year, to $389,500. Housing starts will drop 10.4% from 2022 to 2023, to 1.39 million, before rising to 1.48 million, or 6.5%, in 2024. "Because of homebuilders' ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates. This underscores the importance of increased inventory in helping to get the overall housing market moving," said Yun. NAR expects newly constructed home sales will grow from last year by 4.5% in 2023, to 670,000—because of additional inventory in this market segment—and increase by another 19.4% in 2024, to 800,000. The national median new home price will drop by 5.9% this year, to $430,800, and improve by 3.5% next year, to $445,800. Realtor.com Senior Economic Research Analyst Hannah Jones also commented on the report – “Pending home sales grew 1.1% in September but remained 11% below year-ago levels as mortgage rates continued to ascend towards 8%. The Pending Home Sales Index increased month-over-month in the Midwest (+4.1%), the Northeast (+0.8%) and the South (+0.7%), but fell in the West (-1.8%),” Jones said. “All four regions saw year-over-year declines. New home sales, which are also based on contract signings, increased in September as buyers hurried to lock in a mortgage before rates could climb any higher.

Source: NAR