In December, pending home sales decreased by 5.5%, reflecting a shift in the housing market after several months of growth. The Pending Home Sales Index stood at 74.4, indicating a significant decline compared to past years. High mortgage rates are affecting buyer sentiment, despite strong cash transactions sustaining demand. Chief economists suggest that a decrease in mortgage rates could boost buyer activity, while all regions saw declines in sales. The trend of fluctuating economic data underlines the uncertain landscape facing home buyers and sellers going into 2024.
Economic data never moves in a straight line. High mortgage rates have not significantly dented housing demand due to greater numbers of cash transactions.
Pending sales activity had been higher in October and November, and there was some growing optimism that the 2025 housing market could start out strong.
The most obvious factor that would draw buyers into the market is a drop in mortgage rates. While rates are not expected to drop significantly, short-term dips could cause buyers to get into the market opportunistically.
Regionally, pending home sales fell in all four regions month over month, dropping 8.1% in the Northeast, 4.9% in the Midwest, 2.7% in the South and 10.3% in the West.
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