In the past few weeks, there has been a noticeable change in the tone in the housing and mortgage market. Not speaking in behalf of everyone in that market, but in daily talks with mortgage originators, the topic of an increase in home sales is now being talked about for the first time in quite a while.
Despite what some may think, we aren’t experiencing a massive turnaround in fortune. The sales pace isn’t rapidly returning to the near-all-time highs that were experienced during 2020 and 2021. The hope is, instead, that sales levels are finally bouncing back after a depressing decline that brought them to near-all-time lows.
Recent Pending Home Sales data from the National Association of Realtors (NAR) quantify the potential shift in the housing market. Since we can say things like “pending home sales moved up at the fastest rate since October 2021,” words are probably more valuable than pictures in this case.
NAR’s Pending Home Sales Index (PHSI) for seasonally adjusted annual rate comparison for December 2022 is summarized in the table below.
|Region||vs. November 2022||vs. 2021|
An indicator of housing activity, Pending Home Sales (PHS) measures the number of signed real estate contracts for existing single-family homes, condominiums, and cooperatives. In general, the Pending Home Sales Index leads Existing-Home Sales by a month or two since homes typically go under contract a month or two before they are sold.
NAR Chief Economist Lawrence Yun said that this is likely to be an end to this recent downturn in home sales activity. With mortgage rates being the dominant factor for driving home sales, it is evident that recent drops in rates are helping to reach market stability.