Housing contract activity picked up again in November as buyers shrugged off elevated mortgage rates and took advantage of higher inventory levels.
The Pending Home Sales Index, which tracks contract signings on existing homes, rose 2.2% from October to 79, its highest reading since February 2023, according to the National Association of Realtors (NAR). An index level of 100 is equal to contract activity in 2001.
It’s the fourth straight month of gains. Pending home sales are up 6.9% compared to November 2023.
“Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” Lawrence Yun, NAR’s chief economist, said in a statement.
Last month, housing contract activity rose in all regions of the country except for the Northeast. The South saw the largest month-over-month increase, improving 5.2% from October and 8.5% from a year ago.
All parts of the country saw more contract activity compared with November 2023, led by an 11.8% jump in the West.
Although the market is picking up, 2024 is on track to be one of the slowest years for existing home sales in decades. High prices, coupled with elevated mortgage rates, have kept many potential buyers and sellers sidelined.
Still, after two years of mortgage rates above 6%, Yun said buyers may be adjusting.
“Buyers are no longer waiting for or expecting mortgage rates to fall substantially,” the statement said. “Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.”
The NAR expects 4.5 million existing home sales next year. As of November, existing home sales were at a seasonally adjusted annual rate of 4.15 million.
Homes typically go under contract one to two months before a sale is completed, meaning pending home sales are a leading indicator of housing market activity.
