By Amina Niasse
NEW YORK (Reuters) -Pending U.S. home sales shot up in December by the most since June 2020, a report showed on Friday, indicating stabilizing mortgage rates may be beginning to draw prospective buyers from the sidelines and could fuel an anticipated residential real estate rebound this year.
The National Association of Realtors Pending Home Sales index rose 8.3% to 77.3, rebounding from a downwardly revised record-low of 71.4 in November. A poll by Reuters showed economists expected a 1.5% increase.
On a year-over-year basis, pending home sales have risen 1.3%.
“The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices,” said Lawrence Yun, chief economist at the NAR. “Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.”
The index had tumbled to record lows last year as higher mortgage rates discouraged homeowners from selling, limiting inventory and buyer traffic.
Mortgage rates neared 8% in October, a two-decade high, but have eased after the Federal Reserve left its policy benchmark rate unchanged since July. For the week ended Jan. 25, mortgage rates edged up to 6.69% but remained stabilized in the mid-six percent range, according to Freddie Mac.
Pending sales gained by the most in the West and South regions, by 14% and 11.9%, respectively. The Northeast experienced the only decline, with pending home sales falling by 3% on a monthly basis.
Looking ahead, existing home sales are expected to rise by 13% from 2023 to 4.62 million units in 2024, fueled by easing interest rates and reduced volatility in the bond market, NAR said. Median home prices are seen rising by 1.4% to $395,100 in 2024.
It also forecast that the Fed will cut its policy benchmark rate four times, and the average 30-year fixed-rate mortgage will hover between 6% and 7%.