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llustration by Lanette Behiry/Adobe Stock.
The home sales pace has been slower this year, but a fall bump in pending sales could translate to a December rally if mortgage rates drop. Housing Market Decoded helps make sense of market data and numbers for informed decision-making.
Through the third quarter, existing home sales were below last year's levels due to higher-for-longer mortgage rates and affordability challenges. However, new pending sales showed strength in the fall, suggesting 2024 might end with more sales than last year.
The Numbers:
According to the National Association of Realtors, there have been 3.42 million existing home sales through October on a seasonally unadjusted basis. The pace of home sales this year is about 2% below 2023 levels. Typically, fourth-quarter sales account for 30% of total annual sales.
To match 2023 levels, we need around 1.02 million home sales between October and December – a 9% bump over the same period in 2023.
What Went Wrong:
Mortgage rates were expected to fall this year, but the Federal Reserve delayed interest rate cuts due to lingering inflation concerns. Strong economic conditions and political uncertainty led to rising mortgage rates instead of falling ones. Record-low mortgage rates during the pandemic kept many homeowners from selling their homes, while affordability challenges increased due to record-high home prices and rising mortgage rates.
Despite these obstacles, new pending sales showed strength in September, with a 7.4% national increase. Local markets saw an even bigger bump, with almost 9% year-over-year growth in the Mid-Atlantic region. A drop in mortgage rates in the last few weeks of the year may be what's needed to push 2024 totals over the threshold.
Dr. Lisa Sturtevant has been researching economic, demographic, and housing market issues for over 20 years. She is currently Chief Economist at Bright MLS, where she leads research and forecast activities. The views expressed in this column are solely those of the author.
