Pending home sales surprised markets on Friday with a positive move in December, according to the Pending Home Sales Index from the National Association of Realtors.
- M-O-M: The Pending Home Sales Index increased 2.5% to 76.9 in December, up from November’s 2.6% drop and is only the second time all year sales had a positive month.
- Y-O-Y: Pending transactions were down 33.8% to end the year.
Beat The Street. Economists thought pending sales were going to fall 2.5% in December.
South On Top. The South continues to hold the top spot as the Pending Home Sales Index jumped 6.0% to 94.1 in December. The Midwest took the number two spot even with a 0.3% drop to an index of 77.6 followed by the Northeast at 64.7 (-6.5%) and the West at 58.6 (+6.5%).
- Y-O-Y: The West reported the biggest year-over-year drop with a 37.5% decline followed by the South (-34.5%), the Northeast (-32.5%), and the Midwest (-30.1%).
Analysis. Lawrence Yun, NAR Chief Economist, said the housing bottom is behind us. “This recent low point in home sales activity is likely over…Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”
- Yun also noted that the South’s dominance will continue in 2023. “Job gains will steadily become important in driving local home-sales markets. The South, in particular, is set to outperform the rest of the country, thanks primarily to better job market conditions in this part of the country compared to other regions.”