Pending home sales growth in October, this points to a positive end to 2024
Despite the recent increase in mortgage rates, the first indicators show that the housing market is moving in the right direction. The last signal comes from the National Association of Real Estate Agents‘ (NAR) Pending Home Sales Index (PHSI), which shows sales growing 5.4% year over year in October and 2% compared to September.
The value of 77.4 for the PHSI is the highest since March and the third highest since December 2023. The PHSI was benchmarked at 100 in 2001.
“Home buying momentum is increasing after nearly two years of suppressed home sales,” NAR chief economist Lawrence Yun said in a statement. “Even now that mortgage rates are modest despite the moderate increases Federal ReserveThe country’s decision to cut short-term interbank lending rates in September will continue to create new jobs and increase housing stock, bringing more consumers to the market.”
A geographic breakdown of the index yields more good news, as the PHSI rose substantially in all four regions of the country.
On a monthly basis, pending sales grew the most in the West at 9.8%, followed by the Midwest (+7.1%), the South (+6.7%) and the Northeast (+6.5%). Pending sales in the West also grew 12.3% year over year. The Northeast posted an annual growth rate of 3.3%, while the Midwest and South remained flat.
“The October sales data is a sign that fourth quarter sales will be strong enough that 2024 sales will be higher than 2023 sales.” Clear MLS Chief economist Lisa Sturtevant said this in a statement. “However, there are headwinds. Higher mortgage rates mean some buyers may decide to wait until 2025.”
The positive PHSI reading follows NAR’s existing home sales report for October, which showed sales reaching a seasonally adjusted annual rate of 3.96 million. While that rate is well below historical averages, the 2.9% annualized growth is the first annualized increase since July 2021.
The sales data of new homes in October of the U.S. Census Bureau was less encouraging. Sales last month were a seasonally adjusted 610,000, down 9.4% year-over-year. The decline is largely due to a huge decline in the South, which easily accounts for most new home sales. That decline is partly due to the recent hurricanes and rising mortgage rates.
