Pending home sales saw the biggest gains in nearly four years last month, according to new data released this morning.
Sales surged in September, rising 7.4% month-over-month, well above the 1.9% expected. This marked the first year-over-year increase (2.2%) since November 2021.
Despite the positive signs, pending sales remain over 40% below their August 2020 peak, when the housing market boomed due to pandemic-driven demand and low mortgage rates.
Looking ahead, the Federal Reserve’s anticipated rate cuts in 2025 are expected to further lower mortgage rates, potentially boosting the housing market.
Comerica's Bill Adams called 2024 a "very bad year" for existing home sales across the US.
"Demand was weak, held back by high mortgage rates," Adams said.
"Supply was weak, too, held back by owners’ reluctance to let go of low mortgages and tax assessments locked in years ago."
But 2025 is gearing up to be "considerably better," according to Adams.
"The latest inflation data in the GDP report for the third quarter shows that inflation continues to slow toward the Fed’s 2% target. And today’s ADP report on private payrolls shows that wage growth is moderating too, even as payroll growth picked up in the month."
Pending sales, a leading indicator for existing home sales, typically forecast sales trends one or two months in advance.