Pending home sales are healthy in December
Pending home sales were healthy in December, the National Association of Realtors reported this morning.
The Pending Home Sales Index (PHSI) increased by 8.3% to 77.3 in December. On a year-over-year basis, the PHSI increased 1.3%. An index reading of 100 is equal to the level of contract activity in 2001.
“The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices,” said Lawrence Yun, NAR chief economist. “Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.”
Quarterly forecast
The NAR also released its Economic Outlook as of January 2024, projecting a 13% increase in existing-home sales in 2024 (from 2023) to 4.62 million and a 15.8% increase in 2025 (from 2024) to 5.35 million.
The annual median home price is expected to rise 1.4% to $395,100 in 2024, and then increase 2.6% to $405,200 in 2025.
“Home sales are projected to rise significantly in each of the next two years as the market steadily returns to normal sales activity,” Yun said.’
The NAR expects the Federal Reserve to cut interest rates four times. The 30-year fixed mortgage rate is also expected to bounce along the 6% to 7% range for most of the year.
The association also forecasts that due to sizable growth in apartment construction over the past three years, rent growth will calm, which will help bring consumer price inflation to less than 3% in 2024.
Here’s how pending home sales performed on a regional basis:
The Northeast PHSI dropped 3% from last month to 62.3, a decline of 3.9% from December 2022.
The Midwest index increased 5.6% to 80.5 in December, up 4.3% from one year ago.
The South PHSI jumped 11.9% to 93.0 in December, rising 1.5% from the prior year.
The West index surged 14.0% in December to 61.0, up 1.5% from December 2022.
The PHSI is a forward-looking indicator of home sales based on contract signings.
The National Association of Realtors represents more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.
