U.S. Pending Home Sales Fell to Record Low in October
WASHINGTON—Pending home sales dropped 1.5% in October, according to the National Association of Realtors and reached the lowest level since NAR began tracking pending contract sales more than two decades ago.
The Northeast posted a monthly gain in transactions while the Midwest, South and West all recorded losses. All four U.S. regions noted year-over-year declines in transactions, NAR stated in its report released on Nov. 30.
The Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—dropped 1.5% to 71.4 in October, the lowest number since the index was originated in 2001. Year-over-year, pending transactions declined 8.5%. An index of 100 is equal to the level of contract activity in 2001.
“During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years,” said Lawrence Yun, NAR chief economist. “Recent weeks' successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied. Multiple offers, of course, yield only one winner, with the rest left to continue their search.”
Pending Home Sales Regional Breakdown
The Northeast PHSI jumped 2.7% from last month to 64.8, although that figure represented a loss of 6.5% from October 2022. The Midwest index contracted 0.4% to 73.8 in October, down 10.3% from one year ago.
The South PHSI decreased 1.9% to 85.6 in October, declining 7.1% from the prior year. The West index fell 6.0% in October to 51.8, dipping 10.8% from October 2022.
“Home sales are rising in places where more inventory is available,” Yun added. “Sales for properties priced above $750,000 were higher than a year ago, because there is more inventory at this price point than what we saw last October. Additionally, newly built home sales are up 4.5% year-to-date due to homebuilders' ability to create more inventory.1 It is vital that we continue to focus on boosting housing supply by all means in all corners of the country over the coming months.”
NAR notes a turnaround may be in sight, as mortgage rates have started to drop from their recent peaks. The 30-year fixed-rate mortgage averaged 7.29% for the week ending Nov. 22, according to Freddie Mac.
Realtor Magazine reports that Yun said that despite the latest borrowing costs edging lower, would-be buyers are now up against another obstacle: finding a home to buy.
“Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied,” Yun says. “Multiple offers, of course, yield only one winner—with the rest left to continue their search.” Despite a slowdown in home sales, multiple offers are still occurring because of low inventory, and many current homeowners are reluctant to sell. NAR notes that buyers are most likely to face intense competition for starter and mid-priced homes.
“It is vital that we continue to focus on boosting housing supply by all means in all corners of the country over the coming months,” Yun told Realtor Magazine.
