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Pending home sales sagged in October, falling to the lowest point in more than two decades, according to data released Thursday by the National Association of Realtors.
Pending home sales fell 1.5 percent month over month in October to a reading of 71.4 — 8.5 percent lower than a year earlier and the lowest score recorded since the Pending Home Sales Index began publishing in 2001, according to NAR.
The low point in pending home sales came as mortgage rates hit their highest level in 20 years, though they have subsequently retreated slightly.
“During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years,” Lawrence Yun, chief economist at NAR said in a statement. “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.”
The Pending Home Sales Index jumped 2.7 percent monthly in the Northeast — the only region in which an increase was recorded — but was down 6.5 percent from a year prior. The Midwest index contracted 0.4 percent to 73.8 in October, down 10.3 percent from a year ago, while pending sales in the South decreased 1.9 percent to 85.6 in October, a 7.1 percent decline from the previous year. Pending sales dropped 6 percent on a monthly basis in the West, 10.8 percent below October 2022 levels.
“Home sales are rising in places where more inventory is available,” Yun said. “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 percent year-to-date due to homebuilders’ ability to create more inventory. 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.”
Representing the number of homes that have gone under contract, pending home sales are thought of as the most reliable forward-looking indicator of where the housing market is headed in the coming weeks. A sale is listed as pending when the contract has been signed but the transaction has not closed, with sales usually being finalized within one or two months of signing.
