Pending Sales Hold Steady Despite Sustained Rates Above 7%

Pending Sales Hold Steady Despite Sustained Rates Above 7%

Interest rates rose to 7.18% in the second week of September 2023

MarketNsight, a leading real estate data and analysis provider, reports that even after six weeks in a row with 30-year fixed mortgage rates higher than 7%, pending sales are performing better than in the fall of 2022.

“Home buyers have become accustomed to higher rates, and the market continues to be driven by the lack of housing supply,” said John Hunt, Principal and Chief Analyst at MarketNsight.

To put this in perspective, pending sales so far in 2023 are down an average of 17% year over year (YOY) and down 19% compared to 2019. These levels are greatly improved from the fall of 2022 when weekly rates last crossed 7%.

“That was enough to send pending sales into a tailspin, bottoming in the middle of November 2022 with pending sales down 45% YOY and down 33% over the benchmark year of 2019,” said Hunt.

This autumn, rates hit 7.12% in the first week of September and 7.18% in the second week, marking six consecutive weeks with rates above 7% – the longest sustained period with rates above that level since 2003.

Weekly data from MarketNsight continues to accurately predict the monthly National Association of Realtors numbers four to six weeks in advance. According to Hunt, “We expect that August national pending sales numbers from the NAR will be down approximately 17% to 20% when released on September 28.”

MarketNsight reports that pending sales were only down 14% and 12% YOY in the first two weeks of September, an improvement over August’s pending sales, which were down 18% YOY.

Home prices continued to rise in the first half of September. For the year to date, prices through the second week of September were up 7% YOY and up 2% over 2022. For comparison, average prices through the second week of September are up 17% over September of 2021, up 34% compared to September 2020 and up 58% over September 2019.

Hunt comments, “We forecast that prices will appreciate between 4% and 6% for 2023, which will be in line with the average annual appreciation over the last 50 years.”

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