U.S. Pending Home Sales Sag More Than Expected in November
- Contracts to buy U.S. previously owned homes fell far more than expected in November, diving for a sixth straight month in the latest indication of the hefty toll the Federal Reserve's interest rate hikes are taking on the housing market as the central bank seeks to curb inflation.
- This month, the Fed raised rates again by half a percentage point, capping a year that saw its benchmark rate shoot from near zero in March to between 4.25% and 4.5%.
- The National Association of Realtors (NAR) said on Wednesday, Dec. 28, its Pending Home Sales Index, based on signed contracts, fell 4% to 73.9 last month from October's downwardly revised 77.0. November's was the lowest reading - aside from the short-lived drop in the early months of the pandemic - since NAR launched the index in 2001.
- The housing market has suffered the most visible effects of aggressive Fed interest rate hikes that are aimed at curbing high inflation by undercutting demand in the economy. By the Fed's preferred measure, inflation is still running nearly three times its 2% goal, having risen earlier in 2022 at its fastest pace in 40 years.
- Unlike other parts of the economy - many of which have yet to show a significant impact from the Fed's actions - the housing market has reacted in near real-time to the jump in borrowing costs engineered by the central bank.