Pending home sales in the US experienced an unexpected increase last month, with gains reported across all regions of the country, as highlighted by the National Association of Realtors (NAR) on Wednesday. This forward-looking indicator of home sales, based on contract signings, showed a 2% month-over-month rise in October, reaching a 77.4 index reading.
Analysts had initially expected a 2% decline in the NAR's pending home sales index, according to a Bloomberg survey. All four regions monitored by the NAR demonstrated sales gains, with the Northeast and Midwest leading the pack. Comparatively, the pending home sales index surged 5.4% on an annual basis, surpassing the modest 0.2% growth expectation outlined by Bloomberg, largely driven by double-digit growth in the Western region.
NAR Chief Economist Lawrence Yun noted, 'Homebuying momentum is building after nearly two years of suppressed home sales.' He continued, 'Even in the face of modestly rising mortgage rates, brought on by the Federal Reserve's decision to lower the short-term interbank lending rate in September, continuous job additions and an increase in housing inventory are enticing more consumers to enter the market.' Recent data reflects that the average 30-year fixed mortgage rate has climbed to 6.84% as of November 21, rebounding from a two-year low of 6.08% recorded in the week ending September 26, according to figures from Freddie Mac.
The Federal Open Market Committee has executed interest rate cuts totaling 75 basis points over its last two meetings, which took place in September and earlier this month. Moreover, the record-high stock market is benefiting buyers in the upper segment of the market, as asserted by Yun. In the previous week, the NAR disclosed that existing home sales in the US rose unexpectedly by 3.4% on a sequential basis in October, marking the first annual gain in over three years.
Housing inventory for pre-owned homes stood at 1.37 million units at the conclusion of last month, reflecting a 0.7% increase from September and a significant 19% rise from the previous year, as reported by the NAR last week..