Pending Home Sales Steady - Despite 7% Mortgage Rates

November 7, 2024

Pending home sales in the U.S. remained steady despite rising mortgage rates and election uncertainty. While some buyers continued their search, others held back, waiting for more clarity on the country’s economic direction.

In the four weeks ending November 3, pending home sales increased 4.3% year-over-year, maintaining a growth trend seen in recent weeks. This stability is notable given the heightened uncertainty around the election and mortgage rates reaching 7%, which have pushed monthly payments close to July’s highs. With the election outcome likely to influence mortgage rates further, rates have already risen from 7.05% to 7.13% as of Wednesday.

This year-over-year increase partly reflects a lower baseline from last year when near-8% mortgage rates reduced sales activity. However, there are signs that some prospective buyers have paused their search as election day approached. Metrics tracking home tours and other buyer activities show levels at their lowest since mid-September, and mortgage-purchase applications fell by 5% week over week. In various markets, many buyers appear to have adopted a wait-and-see approach over the past few weeks.

Many potential buyers are cautious, often viewing a couple of homes but planning to resume their search in the new year. High mortgage rates have tempered enthusiasm, yet most buyers are adjusting their budgets, understanding that refinancing may be an option if rates decrease.

On the selling side, new listings saw only a 0.3% year-over-year rise, marking the smallest increase in over a year. This minimal growth reflects some sellers waiting until after the election to list their homes.