Pending home sales decreased 1.5% in October compared with September and were down 8.5% compared with October 2022, according to the National Association of Realtors (NAR).
Month over month, contract signings increased 2.7% in the Northeast but fell 0.4% in the Midwest, 1.9% in the South and 6.0% West.
Year over year, pending home sales dropped in all four U.S. regions.
“During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years,” says Lawrence Yun, chief economist for NAR, 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.
“Home sales are rising in places where more inventory is available,” Yun adds. “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.”
Odeta Kushi, deputy chief economist for First American, says the month-over-month decline “was a little better than the consensus expectations of a 2 percent drop.”
“Important to note that pending sales are reflecting the month of October, when mortgage rates were approached 8 percent,” Kushi says in a statement. “Mortgage rates have since retreated. In fact, seasonally adjusted mortgage applications have picked up in November, implying a modest increase in sales.
“Buyers and sellers are very mortgage-rate sensitive. Higher mortgage rates have had a dual impact on the housing market – reducing affordability for potential buyers and keeping sellers rate-locked in,” she adds. “While there remains quite a bit of demand for homes on the sidelines, you can’t buy what’s not for sale, even if you can afford it.”
Photo: Gabrielle Henderson