Is the housing market booming? Why the pending contract to sell the house has the industry buzzing.


A slight decline in mortgage rates in December and January contributed to a second straight month of home sales growth, according to data released Monday by the National Association of Realtors.

The Pending Home Sales Index – a leading indicator of home sales under contract – improved 8% in January. Year over year, pending transactions are down 24%.

The last time waiting for a contract to register more than 8% of the month was three months after the outbreak, when the show stopped. In June 2020, the number of pending home sales increased by 17% compared to the previous month.

“Buyers responded to better affordability from falling mortgage rates in December and January,” said NAR Chief Economist Lawrence Yun.

NAR expects the economy to continue to add jobs in 2023 and 2024, with fixed 30-year mortgage rates gradually falling to an average of 6.1% in 2023 and 5.4% in 2024.

What is the Pending Home Sales Index?

The Pending Home Sales Index, a leading indicator of real estate activity, measures real estate contract activity, and is based on real estate contracts signed for existing single-family homes, condos, and co-ops. Because a home is under contract a month or two before it is sold, the Home Sales Index leads home sales by a month or two.

What does the new real estate data mean for buyers and sellers?

The real estate market is likely to continue to fluctuate. Sellers offer some price discounts. But, thanks to high interest rates, this will not be enough to get some buyers off the fence.

New sales data pending for January provide further evidence that the housing market may have slowed at the end of last year, said Bright MLS Chief Economist Lisa Sturtevant.

“However, it seems that there will not be a return to the V-shaped. Instead, expect a major road to a normal housing market in 2023,” she said.

NEW HOUSE: Is the real estate market recovering? Here is why home builders feel ‘good optimism.’

HOME MARKET: ‘Home selling is over’: Are home buyers now calling the shots in 2023?

Gen Z: Big cities big draw

Why is there so much uncertainty in the real estate market?

Mortgage rates have been rising for the past few weeks and the Federal Reserve has indicated that it will raise rates at least two, and possibly three times, this year, which could send mortgage rates to their highest levels yet.

Mortgage applications fell in February as rates hit their highest levels since late November. Weekly data on housing market activity shows a decline in buyer interest over the past three weeks.

“In the current housing market, it’s a battle between the rational, financial side of buying a home and the instinctive, emotional side. The head and the heart,” Sturtevant said.

“For some buyers, higher mortgage rates mean buying a home is out of the question unless home prices fall,” she said. “For others, rising mortgage rates will be a problem but ultimately won’t stop them from getting back into the market after sitting on the sidelines for months.”

The best lenders: Who is the best competitor?

The best online lenders: Online lenders often offer low fees and low rates

Current mortgage rates: What’s new

Will existing home sales continue to decline?

Even with rising interest rates and operating profit, Yun still expects annual domestic sales to fall 11% in 2023 to a total of 4.5 million units before jumping 18% in 2024 to 5.2 million. NAR projects new home sales will fall 4% annually in 2023 before growing 19% in 2024.

“Home sales are likely to slow down in the first quarter of this year, before picking up further,” Yun said. “But annual gains in home sales will not occur until 2024. In the meantime, home prices will remain stable in most parts of the country with little change in local home prices.”

Regional breakdown of the real estate market

The Northeast PHSI rose 6% from last month, a 20% decrease from January 2022. The Midwest index increased 8%, a 21% decrease from a year ago.

South PHSI increased by 8%, down 25% from last year. The Western index rose 10% in January, down 29% from January 2022.

Yun added, “There was more shortage in the West because of low housing prices, while there was more in the South because of the increase in jobs in the region.”

Swapna Venugopal Ramaswamy is a real estate and economics correspondent for USA TODAY. You can follow her on Twitter @SwapnaVenugopal and subscribe to our Daily Money newsletter here.

#housing #market #booming #pending #contract #sell #house #industry #buzzing

Leave a Comment