U.S. Pending Home Sales Posted Biggest Jump in Over Two Years in December
The latest figures show home buyers were waiting to pounce as interest rates dipped last month
Home seekers in the U.S. are on the hunt once again—but this time they’re putting their money where their mouths are.
Pending home sales rose 4.1% month over month in December on a seasonally adjusted basis—the biggest gain since September 2021—to the highest level in more than a year, according to a Redfin report Friday. They were also up 5.9% from a year earlier, the greatest annual gain since June 2021.
Declining mortgage rates have played a role in attracting prospective buyers. The average 30-year-fixed mortgage rate fell to 6.82% in December from 7.44% the month prior, the largest monthly decline since 2008.
Declining mortgage rates also led to a small bump in new listings, which rose 0.1% month over month. They were up 2.7% year over year—the biggest annual increase since July 2021. Despite the boost in listings, many owners are still holding onto their homes, locked into the low mortgage rate they secured during the pandemic. The overall housing supply still remains below pre-pandemic levels.
“We’re definitely seeing an uptick in activity from both buyers and sellers,” said Abby Alwan, a Redfin Premier real estate agent in Austin, Texas, in the report. “I have two listings in the suburbs that six months ago would’ve sat on the market. But all of a sudden, buyers are coming out of the woodwork, thanks to lower rates. More folks are looking to have conversations about what they need to do to enter the market now that they’ve seen improvement in the market.”
Although demand jumped in December, January numbers have been slower than expected, likely due to inclement winter weather across the U.S. As conditions improve and as long as mortgage rates remain at current levels or lower, the market should regain momentum, Redfin economists predicted in the report.
The study also revealed that home prices posted their greatest increase in over a year. The median U.S. home sale price rose 4% year over year to $403,714 in December, the biggest annual increase since October 2022. The latest rise in home-buyer demand is likely helping to drive prices, in addition to the nation’s chronic shortage of homes for sale.
“Bidding wars are happening again, but they’re much more reasonable than they were during the pandemic home-buying frenzy,” Alwan said in the report. “Houses are getting between one and five competing bids, and instead of offering $100,000 or $200,000 over the asking price, competitive buyers are offering 3% to 5% over.”