Pending Home Sales Rise for Fourth Straight Month as Buyers Adapt to Higher Mortgage Rates

Pending home sales rose in November despite higher mortgage rates and lingering affordability challenges, as buyers took advantage of growing supply.

Signed contracts for existing homes increased 2.2% last month from October, in the fourth straight month of gains, the National Association of Realtors® reported Monday. Pending sales, which don’t include contracts for new construction, were up 6.9% in November from a year earlier.

Pending sales, which are a leading indicator for closings, rose despite an uptick in mortgage rates. Rates for 30-year fixed loans averaged 6.81% in November, up from the two-year low of 6.18% reached in September, according to Freddie Mac.

“Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” says NAR Chief Economist Lawrence Yun. “Mortgage rates have averaged above 6% for the past 24 months. Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.”

Mortgage rates, which averaged 6.85% as of last week, have marched higher despite the Federal Reserve’s recent cuts to its policy rate. That’s partly because the long-term bond markets that are the primary drivers of mortgage rates have adjusted in expectation that the Fed’s benchmark rate will remain higher for longer, following troubling data showing inflation creeping back up.

The NAR report showed that pending home sales grew on a monthly basis in the Midwest, South, and West, while falling in the Northeast. Contract signings grew on an annual basis in all four regions, increasing the most in the West.

“Though interest rates remain a challenge across the market, the seasonal slide in home prices and slower market mean more buyers are willing to come off the sidelines,” says Realtor.com® senior economic research analyst Hannah Jones. “The late fall market has suffered from climbing mortgage rates, but buyers seem eager to take advantage of the favorable seasonal dynamics.”

A separate recent NAR report showed that closed deals for existing homes also rose last month. Total existing-home sales increased 4.8% from October to a seasonally adjusted annual rate of 4.15 million in November. The November sales figure, which excludes new construction, represented a 6.1% jump from one year ago—the largest year-over-year gain since June 2021.

Despite the uptick in sales for November, the country is on pace for a weaker year of home sales than in 2023, when just 4.09 million existing homes were sold—the lowest level since 1995, as affordability challenges persisted.

Home prices continued to march higher in November on an annual basis, with the median existing-home sales price of $406,100 up 4.7% from a year ago, the 17th consecutive month of year-over-year price increases.

“November and December are typically slow months for housing market activity as cold weather and winter holidays keep buyers at home or with family. However, the last two months of 2024 are going to be busier than last year, when rates were above 7%,” says Bright MLS chief economist Lisa Sturtevant.

Sturtevant projects that pent-up buyer demand in the housing market will be unleashed in the first quarter of 2025 if mortgage rates fall and inventory continues to rise.

“Economic uncertainty does put at risk a strong first quarter housing market,” she adds. “If inflation continues to rise, or if the labor market softens, optimism for a rebounding 2025 housing market could be short-lived.”