Pending home sales advance to highest level since early 2023

Pending sales of U.S. homes increased for a fourth month in November to the highest level since early 2023 as homebuyers gave up hopes for lower borrowing costs.

A National Association of Realtors measure of contract signings rose 2.2% to 79, the highest since February 2023. The median estimate in a Bloomberg survey of economists called for a 0.8% increase.

The report aligns with earlier data showing homebuyers pressed ahead with purchases of existing homes in November despite higher mortgage rates. Pending-homes sales tend to be a leading indicator for previously owned homes, as houses typically go under contract a month or two before they're sold.

"Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory," NAR Chief Economist Lawrence Yun said in a statement. "Buyers are no longer waiting for or expecting mortgage rates to fall substantially."

Pending sales were led by a 5.2% monthly increase in the South, with smaller advances in the West and Midwest. Activity declined in the Northeast. Across the U.S., contract signings climbed 5.6% from a year earlier before adjusting for seasonality.

Housing affordability in the U.S. remains under strain amid high prices and elevated borrowing costs. Federal Reserve officials signaled after their Dec. 17-18 policy meeting that they anticipate a slower pace of interest-rate reductions in 2025, suggesting little respite for homebuyers in the near future.