The National Association of Realtors released a report on Thursday showing an unexpected rebound in pending home sales in the U.S. in the month of September.
NAR said its pending home sales index jumped by 1.1 percent to 72.6 in September after plunging by 7.1 percent to 71.8 in August. Economists had expected pending home sales to slump by another 1.5 percent.
“Despite the slight gain, pending contracts remain at historically low levels due to the highest mortgage rates in 20 years,” said Lawrence Yun, NAR chief economist. “Furthermore, inventory remains tight, which hinders sales but keeps home prices elevated.”
The unexpected rebound partly reflected strength in the Midwest, where pending home sales surged by 4.1 percent during the month.
Pending home sales in the Northeast and South also climbed by 0.8 percent and 0.7 percent, respectively, while pending home sales in the West declined by 1.8 percent.
NAR said it expects existing home sales to plummet by 17.5 percent to 4.15 million in 2023 before surging by 13.5 percent to 4.17 million in 2024.
Meanwhile, newly constructed home sales are expected to jump by 4.5 percent to 670,000 in 2023 and spike by another 19.4 percent to 800,000 in 2024.
“Because of homebuilders’ ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates,” said Yun. “This underscores the importance of increased inventory in helping to get the overall housing market moving.”
The Commerce Department released a separate report on Wednesday showing new home sales rebounded by much more than expected in the month of September.
The report said new home sales soared by 12.3 percent to an annual rate of 759,000 in September after plunging by 8.2 percent to a revised rate of 676,000 in August.
Economists had expected new home sales to climb by 0.7 percent to an annual rate of 680,000 from the 675,000 originally reported for the previous month.
With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 773,000 in February 2022.