Home buying has grown more affordable thanks to steadily dropping mortgage rates. The average interest rate on a 30-year fixed-rate mortgage is 3.75, according to Freddie Mac. That's down nearly a full percentage point from November 2018.
"It looks like the drop in mortgage rates relative to late last year has helped boost activity in the housing market," Daniel Silver, an economist at JPMorgan Chase Bank, said in a research note. Still, rising home prices, boosted by a persistent shortage of properties on the market, have limited potential sales growth. Until recently, the gap between home prices and average wage gains had been narrowing. Separate Case-Shiller home price figures released Tuesday showed that home values rose just 2% for the 12 months that ended in August, below the annual wage growth of nearly 3%.
But the NAR says there are signs that lower mortgage rates are now starting to cause prices to accelerate. This month's pending sales ticked up in the Midwest and the South but slipped in the pricier Northeast and West.
Pending sales are a measure of home purchases that are usually completed a month or two later.