U.S. Pending Home Sales Rebound in December
Summary
- PHSI 8.3% m/m (1.3% y/y) in Dec. after two straight m/m declines.
- Month over month, pending home sales rise in three major regions but drop in the Northeast.
- Year over year, sales gain in the three regions, while sales the Northeast fall albeit at a less severe pace.
- Falling mortgage rates and stable home prices will likely boost home-buying activity in 2024.
The Pending Home Sales Index, a forward-looking measure of home sales based on contract signings, jumped 8.3% m/m to 77.3 in December after drops of 0.3% in November (0.0% initially) and 1.2% in October, according to the National Association of Realtors (NAR). The latest PHSI was higher than 76.3 in December 2022. The year-on-year rate was 1.3% in December, an improvement from -5.4% in November and -33.9% in December 2022. Nevertheless, the PHSI had fallen 39.6% since its August 2020 high of 128.0; it fell 16.1% in 2023 after having fallen 21.0% in 2022.
The jump in December sales occurred as the average rate on a 30-year mortgage fell to 6.82% in December, the lowest since June 2023, after falling to 7.44% in November. Those rates were well above a low of 2.68% averaged in December 2020. Notably, the 30-year mortgage rate increased to 6.69% in the January 25 week after falling to 6.60% in the January 18 week, registering the highest level since the December 14 week.
Pending home sales rose m/m in December in all the major regions in the country except in the Northeast. Sales in the West jumped 14.0% (1.5% y/y) in December after a 3.3% rise in November and three consecutive m/m declines. Sales in the South rebounded 11.9% (1.5% y/y) in December, reversing two successive m/m decreases. Sales in the Midwest rose 5.6% (4.3% y/y), the fourth straight m/m rise, on top of a 0.5% November increase. To the downside, sales in the Northeast fell 3.0% (-3.9% y/y) in December, the first m/m fall since August, after a 0.5% rise in November.
The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.
The series dates back to 2001 and are available in Haver's PREALTOR database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the WEEKLY database.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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