(Reuters) - Contracts to buy U.S. previously owned homes rose more than expected in November, notching a fourth straight month of gains as buyers focused on taking advantage of improved inventory despite stubbornly high mortgage rates.
The National Association of Realtors (NAR) said on Monday its Pending Home Sales Index, based on signed contracts, rose 2.2% last month to 79.0 - the highest since February 2023 - from 77.3 in October. Economists polled by Reuters had forecast contracts, which become sales after a month or two, would rise 0.9% after increasing 1.8% in October.
Pending home sales rose 6.9% from a year earlier. On a regional basis, the Midwest, South and West saw monthly increases while contract signings slipped in the Northeast. All four regions posted annual gains.
The increase in contract signings in November dovetailed with a second straight rise in existing home purchase completions last month reported previously by NAR. That earlier report showed the inventory of homes for sale in November was up by nearly 18% from a year earlier.
"Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory," said Lawrence Yun, the NAR's chief economist. "Mortgage rates have averaged above 6% for the past 24 months. Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market."
Indeed, the rate on popular 30-year-fixed-rate mortgages has climbed in the past two months to the highest since July at 6.85%, according to Freddie Mac (OTC:FMCC), essentially counter-acting the interest rate cuts delivered since September by the Federal Reserve.
The 10-year U.S. Treasury note, which is the top influence in determining rates on most home loans, has climbed by roughly a percentage point since September. That has occurred as bond market investors have grown concerned about how policies favored by President-elect Donald Trump - such as tariffs, tax cuts and immigration crackdowns - might feed into higher inflation.