October Pending Home Sales Drop by 1.5%

Pending home sales in the United States fell by 1.5% in October, marking the lowest level since the inception of the Pending Home Sales Index (PHSI) in 2001. The year-over-year decline in pending transactions was reported at 8.5%, with all four U.S. regions experiencing decreases. The Northeast saw a monthly gain of 2.7% but still recorded a 6.5% loss compared to October 2022. Meanwhile, the Midwest, South, and West regions all faced losses, with the West witnessing a significant 6.0% drop in October and a 10.8% decline year-over-year.

The chief economist of the National Association of REALTORS®, Lawrence Yun, attributed the decline in contract signings to the highest mortgage rates in October, reaching levels not seen in over two decades. While recent decreases in mortgage rates may help qualify more home buyers, Yun emphasized that limited housing inventory remains a significant obstacle to fully satisfying housing demand. He noted that sales are increasing in areas with more available inventory, especially for properties priced above $750,000. He stressed the importance of boosting housing supply across the country in the coming months.

The National Association of REALTORS® represents over 1.5 million residential and commercial real estate members. The Pending Home Sales Index serves as a leading indicator for the housing sector, reflecting pending sales of existing homes and providing insights into upcoming sales closings.

CoreLogic: October Sees Continued Rise in Home Prices

CoreLogic, based in Irvine, Calif., reported a 4.7% year-over-year increase in single-family home prices for October. The month-over-month comparison revealed a 0.2% uptick in home prices from September, as indicated by its Home Price Index. According to Selma Hepp, CoreLogic’s chief economist, the sustained growth in home prices during October reflects the positive impact of the robust spring season and contrasts with the previous year’s decline in home prices. Despite elevated mortgage rates, Hepp noted that October’s price gains align with historical trends, underscoring the purchasing power of potential buyers who outnumber available homes for sale. Detached properties showed a higher annual appreciation rate of 5%, compared to 4% for attached properties. CoreLogic’s forecast predicts a 2.9% yearly increase in U.S. home prices for October 2024.

Geographically, the Northeast exhibited the most significant price rebound in October, with Connecticut leading the states in annual appreciation at 10.3%, New Jersey at 9.9%, and Rhode Island at 9.7%. However, some states experienced annual declines, including Utah (-1.6%), Idaho (-1.4%), Montana (-0.5%), and Texas (-0.2%). CoreLogic also identified markets at the highest risk of home price decline over the next year, with Cape Coral-Fort Myers, Fla., Youngstown-Warren-Boardman, Ohio/Pa., Atlanta-Sandy Springs-Roswell, Ga., West Palm Beach-Boca Raton-Delray Beach, Fla., and Deltona-Daytona Beach, Ormond Beach, Fla., all listed with a “very high” probability of price decline (above 70%) and a confidence score between 50–75%.

Redfin Forecasts Homebuyers’ Relief in 2024

Redfin predicts a shift towards a buyer’s market in 2024, driven by the waning impact of pandemic-induced inflation, decreasing mortgage rates, and a rise in home listings. The real estate company anticipates a 1% year-over-year decline in home prices during the second and third quarters of 2024, marking the first decline since 2012. This shift is seen as a positive development for buyers, relieving the ongoing affordability crisis. Redfin attributes the anticipated price drop to an increase in housing supply, outpacing demand, with more homeowners opting to sell as they recognize that mortgage rates are unlikely to return to lower levels.

The second prediction from Redfin is that new home listings will rise, with supply outpacing demand. As the mortgage-rate lock-in effect diminishes, Redfin expects an uptick in listings, reversing the trend of record-low listings observed in 2023. The report suggests that many homeowners, recognizing the current mortgage rate environment, aim to sell before potential declines in home prices. The third prediction is an increase in home sales, with an expected 5% year-over-year growth in 2024. Redfin projects an acceleration in consumer-friendly changes to the home buying process, improved affordability, and a total of 4.3 million home sales for the year, representing a shift from the previous year’s trend of declining momentum.

Source:

Vaimberg, Ron. “Weekly Newsletter – January 6, 2023.” Ron Vaimberg International, Ron Vaimberg, 6 Jan. 2023, https://rvionline.thinkific.com/courses/take/rvi-weekly-newsletter/texts/41523497-weekly-newsletter-january-6-2023.