Contracts to buy existing homes stay flat as mortgage payments soften - NAR

Applied Energetics

28/12/2023 15:04

By Amina Niasse
       NEW YORK, Dec 28 (Reuters) - Pending U.S. home sales
remained unchanged in November, data released Thursday showed,
signaling traffic from prospective buyers is slow to recover
despite interest rates easing on the most common type of home
loan.
    An index gauging contracts to buy existing homes measured at
71.6 in November, level with October's revised reading, the
National Association of Realtors (NAR) said. Economists polled
by Reuters expected an increase of 1%.
    On a yearly basis, pending home sales have declined 5.2%.
    "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,” said Lawrence Yun, chief economist at the
NAR. “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."
    Mortgage interest rates climbed to nearly 8% in October,
coinciding with the lowest reading of pending home sales since
the index was created in 2001. After the Federal Reserve left
its benchmark policy rate unchanged again in November, the
average 30-year fixed-rate mortgage fell to 6.67% for the week
ended Dec. 21, according to Freddie Mac.
    Existing home sales fell precipitously this year from 2022
as high mortgage rates encouraged homeowners locked into cheaper
rates to keep their homes, shortening inventory and eroding
buyer traffic.
    The West and Northeast regions experienced the biggest gain
in contracts signed, by 4.2% and 0.8% respectively. Pending home
sales in the South fell by 2.3%.

 (Reporting by Amina Niasse; Editing by Chizu Nomiyama)
 ((amina.niasse@thomsonreuters.com;))