Contracts to Buy U.S. Existing Homes Flat as Mortgage Payments Soften

Pending U.S. home sales were unchanged in November, data released Thursday showed, signaling that traffic from prospective buyers is slow to recover despite interest rates easing on the most common type of home loan, Reuters reported. An index gauging contracts to buy existing homes measured at 71.6 in November, level with October's revised reading, the National Association of Realtors (NAR) said. Economists polled by Reuters expected an increase of 1%. On a yearly basis, pending home sales have declined 5.2%. "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,” said Lawrence Yun, chief economist at the NAR. “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." Mortgage interest rates climbed to nearly 8% in October, coinciding with the lowest reading of pending home sales since the index was created in 2001. After the Federal Reserve left its benchmark policy rate unchanged again in November, the average 30-year fixed-rate mortgage fell to 6.61%, the lowest since May, for the week ended Dec. 28, Freddie Mac said. Existing home sales fell precipitously this year from 2022 as high mortgage rates encouraged homeowners locked into cheaper rates to keep their homes, shortening inventory and eroding buyer traffic.
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