Pending home sales dipped 1.7% in October compared with September but were up 4.4% compared with October 2018, according to National Association of Realtors (NAR).
The drop follows two straight months of increases.
Regionally, and on a month-over-month basis, contract signings increased 1.9% in the Northeast but fell 1.7% in the South, 2.7% in the Midwest and 3.4% in the West.
Lack of inventory was – once again – the main factor holding pending home sales back.
In addition, October saw a small increase in mortgage rates, which may have also contributed.
“While contract signings have decreased, the overall economic landscape remains favorable,” says Lawrence Yun, chief economist for NAR, in a statement. “Mortgage rates continue to be low at below four percent – which will attract buyers – employment levels are strong and many recession claims have dissipated.”
Yun says the markets where listing prices are around $250,000 – an affordable price point in most markets nationally – are drawing some of the most significant buyer attention, including Fort Wayne, Ind., Pueblo, Colo., Columbus, Ohio, Rochester, N.Y., and Lafayette, Ind.
“We still need to address and, more importantly, correct inadequate levels of inventory across the country,” Yun says. “There is no shortage of buyers seeking homes, but a lack of available units continues to drag down the nation’s housing market and overall economy.
“We risk a lingering shortage of sufficient inventory if homebuilding only continues at its current pace over the next 20 years, when the U.S. population is projected to increase by more than 40 million over this period,” he adds. “Clearly, home builders must step in and construct more housing.”