U.S. Pending Home Sales Spike Much More Than Expected In December

(RTTNews) - The National Association of Realtors released a report on Friday showing pending home sales in the U.S. skyrocketed by much more than expected in the month of December.

NAR said its pending home sales index spiked by 8.3 percent to 77.3 in December after slipping by 0.3 percent to a downwardly revised 71.4 in November.

Economists had expected pending home sales to jump by 1.5 percent compared to the unchanged reading originally reported for the previous month.

"The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices," said Lawrence Yun, NAR chief economist.

He added, "Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand."

The surge in pending home sales in December came as pending home sales in the West and South soared by 14.0 percent and 11.9 percent, respectively.

Pending home sales in the West also shot up by 5.6 percent during the month, while pending home sales in the Northeast slumped by 3.0 percent.

NAR also released its Economic Outlook as of January 2024, projecting a 13 percent spike in existing-home sales in 2024 and a 15.8 percent surge in 2025.

The annual median home price is expected to increase by 1.4 percent to $395,100 in 2024 and then jump by another 2.6 percent to $405,200 in 2025.

"Home sales are projected to rise significantly in each of the next two years as the market steadily returns to normal sales activity," said Yun.

NAR also forecast four interest rate cuts by the Federal Reserve and predicted rent growth will calm due to sizable growth in apartment construction over the past three years, helping bring consumer price inflation to less than 3 percent in 2024.

A separate report released by the Commerce Department on Thursday showed a substantial rebound in new home sales in the U.S. in the month of December.

The Commerce Department said new home sales spiked by 8.0 percent to an annual rate of 664,000 in December after plunging by 9.0 to an upwardly revised rate of 615,000 in November.

Economists had expected new home sales to surge 9.3 percent to a rate of 645,000 from the 590,000 originally reported for the previous month.