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  • U.S. pending home sales stay near record low despite modest pickup in September

    U.S. pending home sales stay near record low despite modest pickup in September

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    The numbers: U.S. pending home sales rebounded in September but remain near a record low as high mortgage rates and low inventory continue to hurt the real-estate sector.

    Pending home sales rose 1.1% in September from the previous month, according to the monthly index released Thursday by the National Association of Realtors.

    But pending home sales were still depressed on an annual basis due to the dearth of home listings. The September figure was the second-lowest reading since the NAR began tracking the data in 2001.

    Transactions were down 11% from last year.

    Nonetheless, the sales pace exceeded expectations on Wall Street. Economists were expecting pending home sales to fall 1.5% in September.

    Pending home sales reflect transactions where the contract has been signed for the sale of an existing home, but the sale has not yet closed. Economists view it as an indicator of the direction of existing-home sales in subsequent months.

    The NAR also released an updated forecast for existing-home sales on Thursday. The group expects sales to fall 17.5% in 2023 to a pace of 4.15 million, which will be the slowest pace since 2008. Yet due to low inventory, the median home price will increase by 0.1% in 2023, the NAR said, to $386,700.

    The group expects home sales to rebound in 2024, rising 13.5% to a rate of 4.71 million. Home prices are expected to rise 0.7% next year, to $389,500. 

    The NAR also expects the 30-year mortgage rate to fall to 6.9% in 2023 and 6.3% in 2024. The 30-year was averaging 7.98% as of Wednesday, according to Mortgage News Daily.

    Big picture: The U.S. housing market is dealing with problems on both the demand and supply sides, but the NAR seems confident that the sector will recover in the new year.

    At present, not only are rates high enough to discourage home buyers, the lack of inventory is also making homes more expensive, which further spooks buyers. The NAR expects the pace of existing-home sales to fall to the slowest in 15 years, when the U.S. was in the midst of a recession caused by the subprime-lending crisis.

    What the realtors said: “Because of home builders’ ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates,” NAR Chief Economist Lawrence Yun said. “This underscores the importance of increased inventory in helping to get the overall housing market moving.”

    Market reaction: Stocks
    DJIA

    SPX
    were mixed in early trading on Thursday. The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    rose above 4.9%.

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  • ‘The housing recession is over,’ real-estate group says, as pending home sales tick up for the first time in 4 months

    ‘The housing recession is over,’ real-estate group says, as pending home sales tick up for the first time in 4 months

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    The numbers: Home sales inched up for the first time in four months, even as the U.S. housing market continues to deal with a dearth of listings. 

    Pending home sales rose by 0.3% in June from the previous month, according to the monthly index released Thursday by the National Association of Realtors.

    The figure exceeded expectations on Wall Street. Economists were expecting pending home sales to fall 0.5% in June.

    Transactions were still down 15.6% from last year.

    Pending home sales reflect transactions where a contract has been signed for the sale of an existing home but the sale has not yet closed. Economists view it as an indicator of the direction of existing-home sales in subsequent months.

    Big picture: Home sales rose as the housing market contends with excess buyer demand and a shortfall in the supply of homes for sale. 

    Real-estate agents are looking to home builders to fill the gap as rate-locked homeowners hold out on selling. New-home sales surged in May, and while they lost some momentum in June, the broader trend is still upward.

    The prices of new homes, which are generally seen as more expensive, are also coming down. The gulf between the median price of a new home and of an existing home narrowed in June, based on data from the NAR and the federal government. 

    What the real-estate experts said: “The recovery has not taken place, but the housing recession is over,” NAR chief economist Lawrence Yun said. “The presence of multiple offers implies that housing demand is not being satisfied due to lack of supply.” 

    The NAR also said it expects rates for 30-year mortgages to average 6.4% this year and to fall to 6% in 2024. 

    The NAR also expects existing-home sales to fall 12.9% in 2023 from the previous year, to 4.38 million, before recovering in 2024 to a rate of 5.06 million.

    The group also expects home prices to hold steady this year, falling only slightly by 0.4% to $384,900, before rising 2.6% next year to $395,000.

    “The West — the country’s most expensive region — will see reduced prices, while the more affordable Midwest region is likely to see a small positive increase,” Yun added.

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  • U.S. pending home sales rise 2.5% in December. Realtors say the housing market is in recovery mode.

    U.S. pending home sales rise 2.5% in December. Realtors say the housing market is in recovery mode.

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    The numbers: U.S. pending-home sales rose 2.5% in December, reversing a six-month losing streak, according to the monthly index released Friday by the National Association of Realtors (NAR).

    Pending home sales were down for six months in a row, as the U.S. Federal Reserve increased interest rates and mortgage rates took off.

    Pending-home sales beat analyst expectations. Analysts polled by the Wall Street Journal had forecast the pending home sales index to drop by 1%.

    Contract signings rose in the South and the West.

    Pending home sales reflect transactions where the contract has been signed for an existing-home sale, but the sale has not yet closed. 

    Economists view it as an indicator for the direction of existing-home sales in subsequent months.

    Mortgage application activity hints at the housing market’s further recovery. Mortgage demand rose in the latest week. 

    Key details: Compared with a year earlier, transactions were down by 33.8%.

    On a monthly basis, pending sales rose in the South and the West. Sales dropped in the Northeast and Midwest. 

    Pending home sales fell the most since last December in the West, by 37.5%.

    Big picture: A dip in rates has boosted demand for mortgages. Buyers are coming back to the market, and the housing market is slowly recovering. But inventory remains low, as sellers hold out. Many are looking to the spring to see if sellers are motivated to list their homes.

    What the realtors said: “This recent low point in home sales activity is likely over,” NAR Chief Economist Lawrence Yun said. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”

    Yun expects mortgage rates to hover between the 5.5% and 6.5% range. 

    He also expects the South to outperform in terms of sales, since the job market is stronger in the region.

    What they’re saying: “Home sales have now largely adjusted to the collapse in demand since late 2021. … [but] a sustained recovery likely remains a long way off,” Kieran Clancy, senior U.S. economist at Pantheon Macroeconomics, wrote in a note.

    “The downturn in sales is coming to an end, but the decline in home prices is only just getting underway,” he added. He expects home prices to fall 15% over the next year.

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    +0.08%
    and the S&P 500
    SPX,
    +0.25%
    were mixed in early trading on Friday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.511%
    rose above 3.5%.

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