Pending home sales rise in November as lower rates spur buyers

November’s declining mortgage rates enticed more homebuyers to come off the sidelines, resulting in an uptick for the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI). 

According to NAR data released Monday, pending home sales were up 3.3% month over month in November, as the PHSI rose to a reading of 79.2. On an annual basis, the PHSI was up 2.6%. An index reading of 100 is equal to the level of contract activity in 2001.

“Homebuyer momentum is building. The data shows the strongest performance of the year after accounting for seasonal factors, and the best performance in nearly three years, dating back to February 2023,” Lawrence Yun, NAR’s chief economist, said in a statement.

“Improving housing affordability — driven by lower mortgage rates and wage growth rising faster than home prices — is helping buyers test the market. More inventory choices compared to last year are also attracting more buyers to the market.”

Pending home sales rose month over month in all four U.S. regions in November. They were up 9.2% in the West, 2.4% in the South, 1.8% in the Northeast and 1.3% in the Midwest. On a yearly basis, sales again rose in all four regions, with the South posting the largest increase at 3.3% and the Northeast recording the smallest increase at 1.8%.

Additionally, the Realtor’s Confidence Index survey showed that in November, 22% of NAR members anticipated an increase in buyer traffic in the next three months — up from 17% in October but down from 24% a year ago.

On the sell side, 18% of NAR members reported expecting an increase in seller traffic in the next three months, up from 16% last month but down from 22% a year prior.

Despite the uptick in pending home sales and NAR members’ increased optimism about consumer traffic, economists believe that the housing market will most likely end the year with sales at roughly the same level as 2024.

“Home buyers, sellers and real estate professionals, alike, are looking for a stronger 2026 housing market. But next year will be a transitioning market and not a turnaround market,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement.

“Lower rates and more inventory will lead to more housing market activity. However, increasing economic uncertainty will continue to hold some buyers and sellers back.”