Home Sales Rebound – Undeniable Good News For Buyers

Home Sales Rebound – Undeniable Good News For Buyers
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Pending home sales increased in January, indicating that buyers are returning to the market as interest rates settle in the 6% range.Contract signings rose for the second straight month in January, marking the largest month-to-month rise since June 2020, according to the National Association of REALTORS®. The National Association of Realtors’ Pending Home Sales Index increased 8.1% from December to January, indicating that purchasers are racing to take advantage of lately low financing rates. In other housing news, the Commerce Department stated that sales of freshly constructed single-family homes increased 7.2% last month.Mortgage rates surpassed the 7% mark in November, more than doubling from the previous year and causing price shock among purchasers. However, the 30-year fixed-rate mortgage has been dialed back to the 6% level since the beginning of the year, coming in at 6.5% last week, with less volatile swings. According to the NAR, mortgage rates will average 6.1% this year and 5.4% in 2024. “Buyers reacted positively to lower mortgage rates in December and January,” says NAR Chief Economist Lawrence Yun.

An improving interest rate climate, combined with recent employment increases, is leading to a more positive housing forecast. House sales activity appears to have “bottomed out” in the first quarter, but a yearly increase in home sales will not occur until 2024, according to Yun. Contract signatures are still down 24.1% year on year after the pandemic-fueled homebuying rush.

Meanwhile, Yun predicts that house prices will stay stable in most areas of the country, with only a minor shift in the national median home price. Following two years of rapid growth, the National Association of Realtors expects the typical existing-home price to decrease. The national typical house price is anticipated to be around $380,100 this year, down 1.6% from last year. The National Association of Realtors predicts that house values will rise 3.1% to $391,800 next year.

The National Association of Realtors predicts a 1.3% increase in the typical new-home price to $461,000 in 2023, followed by a 2.8% increase to $474,500 in 2024. NAR attributes the expected increases in new-home prices to increased land and building material expenses.

According to NAR, all four main areas of the United States saw monthly increases in contract signings in January. The West experienced the greatest rise, followed by the South. “An additional boost happened in the West due to lower home prices, whereas increases in the South were due to greater employment growth,” Yun says.

New Home Sales Rebound

Last month’s increase in home sales was also noticed in the new-home market. The National Association of Home Builders cited builders’ sales offers, such as mortgage rate buydowns, paying points for buyers, or even providing price discounts, for bringing back house buyers. According to NAHB polls, 57% of builders have reported using rewards to boost sales.

“Buyer discounts, combined with mortgage rate stability during the month of January, boosted the speed of new home sales for the month,” says Alicia Huey, NAHB chair. “However, revenues are down 19.4% year on year, indicating present market weakness.”

Affordability is still a concern for house purchasers. According to Danushka Nanayakkara-Skillington, the NAHB’s associate vice president for forecasting and research, the typical price of a new house has dropped for three straight months and is down from a year ago. The typical new-home price dropped for the third month in a row after peaking in October at $496,800. The typical price in January was $427,500, an 8.2% decrease from December.

In the new-home market, buyers are discovering more accessible inventory. Finished, ready-to-occupy inventory increased 115% year on year, despite an especially low level in 2022. Builders also point out that ready-to-occupy inventory accounts for only 17% of the overall stock of new houses.


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Dorian Moffat

Dorian has over 20 years of experience, operating as a results orientated Real Estate Broker, who practices his profession with the highest moral and ethical values.

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