Pending home sales eked-out an increase of 1.1% in September, according to the National Association of Realtors (NAR), but total sales volume is so low that the increase is basically inconsequential.
The Northeast, Midwest and South posted monthly gains in transactions while the West experienced a loss, NAR says.
All four U.S. regions posted year-over-year decreases in contract signings.
“Despite the slight gain, pending contracts remain at historically low levels due to the highest mortgage rates in 20 years,” says Lawrence Yun, chief economist for NAR. “Furthermore, inventory remains tight, which hinders sales but keeps home prices elevated.”
Year over year, pending transactions decreased 11% compared with September 2022.
NAR forecasts that the average rate for a 30-year fixed mortgage will be 6.9% for 2023 and decrease to an average of 6.3% in 2024, while the unemployment rate will lower to 3.7% in 2023 before increasing to 4.1% in 2024.
NAR predicts existing-home sales will decrease 17.5% in 2023, falling to 4.15 million, before rising 13.5%, to 4.71 million in 2024.
Compared to 2022, national median existing-home prices are projected to remain stable – edging higher by 0.1% to $386,700, before increasing by 0.7% next year, to $389,500.
Housing starts will drop 10.4% in 2023, to 1.39 million, before rising to 1.48 million, or 6.5%, in 2024.
“Because of homebuilders’ ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates,” Yun says. “This underscores the importance of increased inventory in helping to get the overall housing market moving.”
NAR expects new home sales to grow 4.5% in 2023, to 670,000 – because of additional inventory in this market segment – and increase by another 19.4% in 2024, to 800,000.
The national median new home price will drop by 5.9% this year, to $430,800, and improve by 3.5% next year, to $445,800.
Regionally, and month-over-month, pending home sales increased 0.8% in the Northeast, 4.1% in the Midwest, and 0.7% in the South, but fell 1.8% in the West.
“Sales are expected to turn positive by early next year, with affordable regions and fast job-creating markets in better positions to recover, led by the Midwest and South,” Yun says.
Photo: Andrea Piacquadio