Contract signings to purchase existing homes climbed in January for the second month in a row to the highest monthly level since June 2020, but saw a steep drop nationwide year-over-year.
The National Association of Realtors reported Monday its pending home sales index surged 8.1% last month in a major surprise to economists polled by Refinitiv, who had expected only a 1% increase.
"Buyers responded to better affordability from falling mortgage rates in December and January," NAR chief economist Lawrence Yun said in a statement.
NEW HOME SALES BEAT WALL STREET'S EXPECTATIONS
Pending home transactions tumbled 24.1% on an annualized basis in January, and the NAR does not expect the housing market to regain its footing on that measure for another year.
"Home sales activity looks to be bottoming out in the first quarter of this year, before incremental improvements will occur," Yun said. "But an annual gain in home sales will not occur until 2024. Meanwhile, home prices will be steady in most parts of the country with a minor change in the national median home price."
Yun expects annual existing-home sales to drop 11.1% in 2023 to a total of 4.47 million units before jumping 17.7% in 2024 (5.26 million units). NAR projects new-home sales will fall 3.7% year-over-year in 2023 before growing 19.4% in 2024.
NAR also predicts median existing-home prices will be stable compared to the previous year for most markets — with the national median home price decreasing by 1.6% in 2023, to $380,100, before regaining positive traction of 3.1% in HIGH-INTEREST,800.
Meanwhile, mortgage rates have risen for the past three weeks, putting added pressure on prospective buyers seeking relief from inflated home prices and elevated interest rates.
The average rate for a 30-year fixed-rate mortgage hit 6.5% last week, up from 3.89% a year ago according to the latest data from mortgage buyer Freddie Mac. The 15-year fixed-rate note now averages 5.76%, up from 3.14% the same week last year.
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FOX Business' Megan Henney and Jay Spoehel contributed to this report.
