Pending U.S. Home Sales Decline in January Amid High Mortgage Rates

January saw a significant drop in pending home sales as buyers face challenges with rising mortgage rates. Get the latest insights from the National Association of Realtors report.

Pending U.S. home sales took a step back in January, according to a recent report, as potential buyers grapple with the ongoing challenge of high mortgage rates. The surge in pending sales that was seen in December was revised downward significantly from 8.3% to 5.7%, despite an upward revision in the index value for that month, reflecting adjustments made by the National Association of Realtors for the year 2023. Year-over-year, pending home sales saw a decline of 8.8% in January.

Towards the end of 2023, signed contracts plummeted as rising mortgage rates restricted the flow of potential buyers and dissuaded homeowners from putting their properties on the market. The average rate for a 30-year fixed-rate mortgage has slightly decreased from the nearly two-decade highs of around 8% seen in October, remaining below 7% since early December, as reported by Freddie Mac. This trend has persisted following the Federal Reserve's decision to keep its policy benchmark rate unchanged since July.

Looking at the regional breakdown for January, the Midwest and South experienced the largest drops in pending sales on a monthly basis, with declines of 7.6% and 7.3%, respectively. On a year-over-year basis, all regions across the country saw decreases in pending U.S. home sales.

The housing market continues to face challenges due to the lingering impact of high mortgage rates, which have dampened buyer enthusiasm and slowed down overall sales activity. As the Federal Reserve maintains its current rate policy, the market will be closely monitored for any signs of recovery or further decline in the coming months.