Pending Home Sales Surge in November: Fourth Straight Monthly Increase
Pending home sales in November 2024 marked a significant uptick, climbing 2.2% compared to October. This growth represents the fourth consecutive month of increases, according to the National Association of REALTORS® (NAR). With year-over-year contract signings also seeing substantial growth across all U.S. regions, the housing market continues to showcase resilience amidst changing economic conditions. Here’s an in-depth look at what’s driving this momentum and what it means for buyers, sellers, and the real estate market overall.
Key Market Highlights
- Monthly Growth: Pending home sales rose by 2.2% in November.
- Year-over-Year Improvement: Contract signings increased 6.9% compared to November 2023.
- Regional Performance: Midwest, South, and West regions recorded month-over-month gains, while the Northeast experienced a slight decline.
- The West Leads Growth: Year-over-year, the West saw the largest increase in contract signings at 11.8%.
Understanding the Pending Home Sales Index (PHSI)
The Pending Home Sales Index (PHSI), a forward-looking measure based on signed contracts, rose to 79.0 in November. This marks its highest level since February 2023. An index value of 100 is equivalent to the contract activity level observed in 2001—a benchmark year considered normal for the housing market.
“Consumers appear to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” said Lawrence Yun, NAR Chief Economist. “Buyers are no longer waiting for rates to drop substantially and are finding opportunities to negotiate better deals.”
Regional Breakdown: A Closer Look
Northeast
- Monthly Change: -1.3% to 67.8
- Year-over-Year Growth: +5.6%
The Northeast was the only region to experience a monthly decline. Despite this, contract signings were up compared to the same period last year, signaling a steady recovery in the region.
Midwest
- Monthly Change: +0.4% to 78.1
- Year-over-Year Growth: +1.6%
The Midwest showed modest growth both month-over-month and year-over-year, reflecting stable market conditions supported by local job growth and inventory improvements.
South
- Monthly Change: +5.2% to 94.5
- Year-over-Year Growth: +8.5%
The South led the monthly gains with a robust 5.2% increase. Year-over-year growth also remains strong, thanks to a combination of population influx and new housing developments.
West
- Monthly Change: +0.5% to 64.3
- Year-over-Year Growth: +11.8%
The West stands out as the leader in year-over-year growth, showcasing the region’s resilience and attractiveness, particularly in metropolitan areas with booming tech industries.
Factors Driving the Market
- Mortgage Rate Stabilization: Over the past two years, mortgage rates have averaged above 6%. Buyers have adjusted expectations and are entering the market with greater confidence.
- Improved Inventory: Increased housing supply has given buyers more options, shifting dynamics away from a seller’s market.
- Local Economic Growth: Regional markets with robust job creation and infrastructure development are driving increased contract activity.
What It Means for Buyers and Sellers
For Buyers:
- Negotiation Leverage: The shift away from a seller’s market means more opportunities to negotiate favorable terms.
- Inventory Choices: Greater availability of homes makes it easier to find properties that meet specific needs.
For Sellers:
- Competitive Pricing: Setting realistic prices is crucial in a market where buyers have more choices.
- Highlighting Value: Emphasizing unique features and energy-efficient upgrades can make listings stand out.
Insights
Why are pending home sales a key indicator?
Pending sales provide early insights into future closed transactions, helping analysts predict market trends.
How long do pending contracts typically take to close?
Most pending contracts finalize within one to two months. However, delays can occur due to mortgage approval, inspection issues, or appraisals.
Will mortgage rates continue to impact the market?
Yes, mortgage rates remain a critical factor. While current levels have stabilized, any significant changes could influence buyer activity.
The Bigger Picture
The November rise in pending home sales highlights a housing market adapting to new norms. Buyers and sellers are recalibrating expectations as mortgage rates stabilize and inventory expands. With all four regions showing year-over-year growth, the market demonstrates resilience and adaptability. As 2025 approaches, local economic factors and policy changes will play pivotal roles in shaping the trajectory of real estate.
