US Pending Home Sales Continue To Climb Despite High Mortgage Rates

What’s going on here?

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US pending home sales continued to climb in November, surprising many as buyers navigated high mortgage rates.

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What does this mean?

November marked the fourth consecutive month of growth in contracts to buy previously owned homes, with the National Association of Realtors’ Index climbing to 79.0 from October’s 77.3. This defied economists’ predictions of a 0.9% increase, showing a year-over-year surge of 6.9%. While the Midwest, South, and West regions saw gains, the Northeast faced a setback. The crucial change? Housing inventory jumped nearly 18% from last year, offering more choice to buyers who’ve had two years to adjust to rates over 6%. As Freddie Mac noted, the fixed-rate mortgage reached 6.85%, driven by inflation worries linked to the rise of the 10-year US Treasury note.

Why should I care?

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For markets: Buyers break through barriers.

Even with high mortgage rates, buyers are seizing opportunities in a housing market strengthened by increased inventory. As rates rise, spurred by inflation concerns and climbing Treasury notes, the housing market’s resilience suggests potential for continued growth. Investors should watch regional disparities, as gains in the Midwest, South, and West provide insights into local economic conditions.

The bigger picture: Adjusting to the new normal.

Recent trends highlight a shift in the real estate landscape where buyers are acclimating to consistently higher mortgage rates. This adaptation reflects broader economic stability as home seekers leverage increased inventory to negotiate better terms. Long-term planning in real estate markets may need to consider these new buyer behaviors and regional growth patterns.