Pending home sales index holds at lowest level on record

A gauge of pending U.S. existing-home purchases held at a record low in November, indicating a weak resale market beset by a lack of inventory and high prices.

The National Association of Realtors' index of contract signings to purchase previously owned homes was unchanged at 71.6, the lowest in data back to 2001. The median estimate in a Bloomberg survey of economists called for a gain of 0.9%.

"Although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings," Lawrence Yun, NAR's chief economist, said in a statement.

Pending home sales decreased 5.1% from a year earlier on an unadjusted basis.

Mortgage rates that have dipped below 7% in recent weeks, after flirting with 8% in the fall, have given a boost to demand for new properties. New-home construction hit a six-month high last month, while contract closings on previously owned homes rebounded slightly from a 13-year low. 

Builders and real estate brokers reported renewed interest from buyers and sellers following comments earlier this month from the Federal Reserve, which signaled it has finished increasing interest rates.

"With mortgage rates falling further in December – leading to savings of around $300 per month from the recent cyclical peak in rates – home sales will improve in 2024," Yun said.

The index of contract signings for existing homes declined in the South, the biggest US housing market, to the lowest level on record. Pending sales climbed in the other three regions.