Housing Market Takes a Turn as Sales Rebound

Pending home sales, which refers to a process in real estate where a seller has accepted an offer on their property, declined the least in more than a year, a sign real estate analysts say of a rebound in the housing market.

Pending home sales fell 4 percent for the year in the four weeks ending December 24, according to data from the real estate firm Redfin, in what was the smallest decline since March 2022. This development comes amid decelerating mortgage rates which at one point in October soared to their highest level in more than twenty years.

Mortgage rates have declined over the last few weeks. The average 30-year fixed rate mortgage was at 6.61 percent as of December 27, Redfin said, its lowest level since May. Meanwhile, demand shot up six percent compared to a month ago for the week ending December 24.

But prices, a key metric of affordability, continue to go up, with the median sale price jumping by 4.5 percent compared to a year ago to about $364,000, the biggest increase since October 2022. The median asking price also shot up by more than 5 percent to more than $363,000.

Sale price increases were the biggest since October 2022.

"Prices are up partly because rapidly rising mortgage rates were hampering prices during this time last year," Redfin said.

Another reason that prices continue to be elevated is a lack of enough inventory available for buyers.

Daryl Fairweather, Redfin's chief economist, told Newsweek earlier this month that the U.S. housing market was 4 million homes short of demand, which exacerbates competition that leads to a rise in prices.

Median mortgage payments at a 6.67 percent rate were at $2,400, an increase of more than 7 percent for the year. Nevertheless, Redfin noted that this was more than 12 percent less than the peaks seen in October. It was the lowest level since February, they said.

In another positive signal the market is getting active, new listings jumped by more than 12 percent.

"Biggest uptick since June 2021. The increase is partly because new listings were falling at this time last year," Redfin said.

But another expert analysis released on Thursday provided a reminder of how much the housing market still has to go to fully rebound from its 2023 doldrums.

The National Association of Realtors (NAR) Pending Home Sales Index, its forward-looking indicator of home sales based on contract signings, stayed unchanged in November and transactions were down 5.2 percent compared to a year ago.

But, NAR experts suggested that there was evidence of a shift as interest in homes increased in the month.

"Although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings," Lawrence Yun, NAR chief economist, said in a statement shared with Newsweek.

"With mortgage rates falling further in December – leading to savings of around $300 per month from the recent cyclical peak in rates – home sales will improve in 2024," he added.