December Pending Home Sales: +2.5% M/M to 76.9 vs. -0.9% consensus and -2.6% in November (revised from -4%).
Pending home sales grew in December for the first time since May, ending a six-month declining streak. “This recent low point in home sales activity is likely over,” said NAR Chief Economist Lawrence Yun. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”
Mortgage rates continue to decline, resulting in a rebound in home buying demand. While potential homebuyers remain sensitive to changes in rates, demand continues to grow, fueled by first-time homebuyers.
By region, the Northeast PHSI fell 6.5% from November to 64.7, down 32.5% from a year earlier. The Midwest index slipped 0.3% M/M to 77.6, down 37.5% from December 2021.
The South PHSI rose 6.1% M/M and dropped 34.5% Y/Y to 94.1. The West index increased 6.4% in December and declined 37.5% Y/Y to 58.6.
“The new normal for mortgage rates will likely be in the 5.5%-6.5% range,” said Yun. “The South is set to outperform the rest of the country, thanks primarily to better job market conditions compared to other regions.”
Earlier, new home sales growth topped expectations in December.