U.S. Home Sales Show Stagnant Pending Activity Despite Decrease in Interest Rates

Pending U.S. home sales remained stagnant in November, according to data released on Thursday, indicating that potential buyer interest is slow to rebound despite a decrease in interest rates for the most common type of home loan. The National Association of Realtors (NAR) reported that the index measuring contracts to purchase existing homes held steady at 71.6 in November, unchanged from the revised reading in October. This was in contrast to economists' expectations of a 1% increase. On a year-over-year basis, pending home sales have declined by 5.2%.

The mortgage interest rates surged to nearly 8% in October, coinciding with the lowest reading of pending home sales since the index was established in 2001. However, after the Federal Reserve decided to keep its benchmark policy rate unchanged in November, the average 30-year fixed-rate mortgage dropped to 6.67% for the week ending December 21, as reported by Freddie Mac.

The decline in existing home sales this year can be attributed to high mortgage rates, which prompted homeowners with lower rates to hold onto their properties, leading to a reduction in inventory and a decrease in buyer traffic. The West and Northeast regions experienced the most significant increase in signed contracts, with gains of 4.2% and 0.8% respectively. Conversely, pending home sales in the South fell by 2.3%.

The unchanged level of pending U.S. home sales in November, despite a decrease in interest rates, suggests that the housing market is still facing challenges in attracting potential buyers. The regional variations in signed contracts further highlight the uneven recovery of the housing market.