Pending Home Sales Flat in November — Will Lower Rates Spark 2024 Growth?

In a report released on December 28th, the National Association of Realtors (NAR) revealed that pending home sales in November remained unchanged from October, marking stability in the market. However, these figures also indicated a 5.2% decline from November of the previous year. This data, crucial for understanding the real estate trends, is based on the contracts signed during November and is a key indicator of future closed sales. It also provides a current glimpse into the attitudes and decisions of potential homebuyers. Despite the stable number of pending sales, the overarching market conditions, particularly fluctuating mortgage rates, significantly influence buyer behavior.

The mortgage rates, a crucial factor in the real estate market, experienced notable fluctuations during this period. After a brief spike, they decreased, affecting the dynamics of buyer interest and activity. Although analysts expected this decline in mortgage rates to result in a slight increase in pending home sales, the actual impact was limited. This was likely due to the combined effect of high home prices and a tight supply, which continued to challenge potential buyers.

Regionally, the trends in pending home sales in November showed varied patterns. While the Northeast and Midwest experienced modest increases, the West saw a more significant rise in pending sales, indicating a stronger response to the fluctuating mortgage rates in areas with higher housing prices. Conversely, the South experienced a decrease in pending sales. According to NAR's chief economist, the decrease in mortgage rates in November led to increased interest among buyers, as evidenced by more frequent lockbox openings, but this did not translate into a significant rise in formal contract submissions.

As the real estate market moves forward, several factors continue to shape its trajectory. The stabilization of mortgage rates in the mid-6% range and the persistently low supply of available homes present ongoing challenges. While new home construction is increasing, these homes often come at a premium price, and the cost of existing homes continues to rise. Despite these hurdles, the real estate market is expected to see improvements in the future. The anticipated further reductions in mortgage rates could lead to considerable monthly savings for homeowners, potentially boosting home sales in the upcoming year. This outlook, based on the latest data and trends, suggests a cautiously optimistic future for the real estate market.

It is a wait-and-see game for the market, if rates continue to drop or stabilize and this remains the new norm like most of 2023.

"Don’t count the days, make the days count."
— Muhammad Ali

Have a great week everyone!