Pending home sales across the country saw a slight increase in August 2024, rising by 0.6%, according to the National Association of REALTORS® (NAR). For NCJAR members, this uptick provides valuable insights into the state of the housing market, especially as contract signings are a key indicator of future home sales. While the Midwest, South, and West posted monthly gains, the Northeast region, which includes New Jersey, experienced a decline.
Regional Breakdown and Market Trends
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, increased to 70.6 in August. However, year-over-year, pending transactions are down 3%. This mixed picture points to regional variations in market activity:
- The Northeast saw a 4.6% drop from last month, with a 2.2% year-over-year decline.
- The Midwest grew 3.2% in August but still saw a 3.6% annual drop.
- The South edged up by 0.1%, though it decreased 5.3% from the prior year.
- The West showed the strongest performance, increasing 3.2% from last month and up 2.7% compared to August 2023.
For NCJAR members, these trends highlight the importance of keeping an eye on both national and regional market shifts. The slight improvement in pending sales, especially in the Midwest and West, is attributed to a dip in mortgage rates to 6.5% in August, improving housing affordability. However, home prices continue to reach new record highs, adding pressure to buyers.
Housing Affordability and Mortgage Trends
NAR’s Chief Economist Lawrence Yun notes that while the slight uptick in contract signings reflects improved affordability due to falling mortgage rates, housing affordability remains a challenge. Yun further explains that the anticipation of future short-term interest rate cuts by the Federal Reserve has caused long-term mortgage rates to decline, reaching nearly 6% in late September.
This drop translates into meaningful savings for buyers. On a typical $300,000 mortgage, the monthly savings could be around $300 compared to a few months ago, offering a glimmer of hope for those looking to enter the market despite high home prices.
What This Means for NCJAR Members
For REALTORS® in New Jersey area, staying informed about these broader market trends is crucial for advising clients effectively. The Northeast’s slight contraction in contract signings means REALTORS® may need to adjust strategies and expectations in the months ahead.
At the same time, with mortgage rates expected to remain favorable, this could present an opportunity for first-time homebuyers and those looking to re-enter the market. By leveraging these insights and maintaining a client-focused approach, NCJAR members can continue to navigate the evolving market landscape.
Stay tuned for the next updates from NAR, with Existing-Home Sales for September set to be released on October 23, and the next Pending Home Sales Index update coming on October 30. Both releases will provide additional clarity on how the market is shaping up as we head into the final quarter of the year.
