Pending home sales in the United States dropped 4.5% in December 2024 compared to the previous month, marking the most significant decline since October 2022. On a year-over-year basis, pending home sales fell 2.3%, according to Redfin's recent report.
The decrease is attributed to rising mortgage rates, which climbed from 6.6% in early December to an average of 7.04% by month's end. This rate increase coincided with the Federal Reserve's projection of fewer interest rate cuts in 2025. The sharp rise in rates led to 40,000 home-purchase agreements being canceled in December, representing 16% of all contracts, a record high for the month since 2017.
Additionally, December 2024 saw median home sale prices increase 6.3% year over year to $427,670, reflecting the largest annual price gain since February. New listings, however, dropped by 1.6% month over month, exacerbating the inventory shortage. Active listings fell 0.3% month over month but rose 7% compared to December 2023, the smallest annual increase in nearly a year.
Existing home sales rose 0.7% month over month to an annualized rate of 4.3 million, the highest level since February 2023. This metric represents the pace of sales if December's rate continued for the entire year. Year over year, existing home sales climbed 6%.
