WASHINGTON (January 26, 2024) – The number of pending home sales increased by 8.3% in December, according to the National Association of REALTORS®. The Midwest, South, and West saw increases in monthly trading volume, while the Northeast recorded losses. The Midwest, South, and West also recorded year-on-year increases, but the Northeast saw a decrease in transaction value compared to last year.
The Pending Home Sales Index (PHSI)*, a forward-looking indicator of home sales based on contract closings, rose to 77.3 in December. Year-over-year, pending deals increased by 1.3%. An index of 100 corresponds to the level of contract activity in 2001.
“The housing market is off to a strong start this year as consumers benefit from lower mortgage rates and stable home prices,” said NAR Chief Economist Lawrence Yun. “Increased employment and rising incomes will further increase housing affordability, but increased supply is essential to meet all potential demand.”
NAR Quarterly US Economic Forecast
NAR also announced Economic outlook as of January 2024, sales of existing homes are expected to increase by 13% in 2024 (compared to 2023) to 4.62 million units, and in 2025 (compared to 2024) to reach 5.35 million units, an increase of 15.8%. The annual median home price is expected to rise 1.4% to $395,100 in 2024 and 2.6% to $405,200 in 2025.
“Home sales are expected to increase significantly over the next two years as the market steadily returns to normal sales activity,” Yun added.
The Fed will probably cut rates four times. 30-year fixed mortgage rates are expected to remain in the 6% to 7% range for most of the year.
NAR expects that rent increases will subside and consumer price inflation will remain below 3% in 2024, as apartment construction has increased significantly over the past three years.
Regional breakdown of pending home sales
The Northeast PHSI decreased by 3.0% from the previous month to 62.3, and by 3.9% from December 2022. The Midwest Index rose 5.6% to 80.5 in December, up 4.3% from a year ago.
The Southern PHSI rose 11.9% to 93.0 in December, an increase of 1.5% from a year ago. The West Index increased by 14.0% to 61.0 in December and has increased by 1.5% from December 2022.
About the National Association of REALTORS®
The National Association of REALTORS® is the nation's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term REALTOR® is a registered association membership mark that identifies real estate professionals who are members of the National Association of REALTORS® and subscribe to its strict code of ethics.
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*The Home Sales Pending Index is a leading indicator for the housing sector based on pending sales of existing homes. If a contract is signed but the transaction is not completed, the sale will be shown as pending, but the sale typically completes within 1-2 months after signing.
Pending contracts are a good indicator that future sales will be completed. However, the period from pending contract to closing of the sale is not the same for all home sales. The length of the process from pending contract to closing sale can be caused by issues such as buyers' difficulty obtaining mortgage financing, home inspection issues, and appraisal issues.
This index is based on a sample covering approximately 40% of monthly multiple listing service data. In developing the model for this index, we demonstrated that the level of monthly sales contract activity was comparable to the level of existing home sales closed over the following two-month period.
An index of 100 equals the average level of contracting activity in 2001, the first year of the study. Coincidentally, existing home sales in 2001 fell within the range of 5 million to 5.5 million, which is considered normal for the current U.S. population.
Note: January existing home sales numbers will be released on February 22nd. The next Pending Home Sales Index will be released on February 29th. All announcement times are 10am ET. It is displayed. NAR Statistics News Release Schedule.
