October was the third consecutive month for gains in home sales, according to the latest NAR data, as buyers showed resilience against higher mortgage rates.
Real estate professionals should be prepared to draft more home sale contracts as buyers gradually return to the housing market. Contract signings, which are a gauge for future home sales, rose 5.4% in October compared to a year ago, the National Association of REALTORS® reported Wednesday. NAR also reported last week that existing-home sales posted their first yearly gain in more than three years and are now up nearly 3% annually.
“Homebuying momentum is building after nearly two years of suppressed home sales,” says NAR Chief Economist Lawrence Yun. “Even with mortgage rates modestly rising—despite the Federal Reserve’s decision to cut the short-term interbank lending rate in September—continuous job additions and more housing inventory are bringing more consumers to the market.”
NAR’s Pending Home Sales Index rose 2% in October compared to September, with all four major regions of the U.S. posting gains. The Northeast saw the largest monthly jump, at nearly 5%, followed by the Midwest, which saw a 4% uptick. More modest gains in pending home sales were reported in the South, up 0.9% month over month, and in the West, up 0.2%. Pending sales in the West, however, are up nearly 17% compared to a year ago.
“It’s encouraging to see contract signings increasing in all major regions of the country,” Yun says. “More notable gains from a year ago occurred in the expensive regions of the Northeast and West. The record-high stock market is providing a boost for upper-end home buyers.”
Prospective home buyers also may be drawn to the greater number of choices as more homes arrive on the market. Housing inventory is up 19% compared to a year ago, according to NAR’s data. Buyer traffic is 7% higher than a year ago, as measured by SentriLock’s lockbox opens.
And while mortgage rates remain elevated, prospective buyers may be growing more accustomed to rates in the 6% range. The 30-year fixed-rate mortgage averaged 6.84% last week, according to Freddie Mac.
“The new normal with mortgage rates will be around 6%,” Yun said in a conference call last week following the release of NAR’s latest existing-home sales data. “Consumers are getting used to the higher rates and may be starting to accept 6%—or 7%—as the new normal. More housing inventory and job gains will be the drivers that boost home sales.”
Source: nar.realtor
