Pending home sales index drops to an all-time low, but optimism abounds
Pending home sales slightly reversed course from September positive print by posting a slight decrease in October of 1.5%. This is according to numbers released by the National Association of Realtors® (NAR).
"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."
If you’re wondering how current mortgage rates will affect your ability to buy a home, you can use our mortgage calculator to find out in minutes.
Digging into the numbers
These numbers are compiled using NAR’s Pending Home Sales Index, a forward-looking measure of sales based on contract signings. An index of 100 equates to the level of activity in 2001, and October’s nationwide index decreased to 71.4, down from 72.6 in September and 71.8 in August. The index is at the lowest point the NAR has recorded since it began measuring pending home sales activity in 2001.
However, for the first time all year, the decline in year-over-year numbers were in the single digits, at 8.5%. This is hopefully the start of a positive trend and perhaps signaling that we’ve hit the bottom of the current cycle.
Here’s a look at each region:
- Northeast: up 2.7% to 64.8, down 6.5% from October 2022
- Midwest: down 0.4% to 73.8, down 10.3% from October 2022
- South: down 1.9% to 85.6, down 7.1% from October 2022
- West: down 6.0% to 51.8, down 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. 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."
Mortgage rates have been coming down significantly since the time period reflected in this report. Also, home prices have been fluctuating quite a bit depending on where you live, which is why working with a local loan officer can help you make the most of current market conditions
Source: https://www.nar.realtor/newsroom/pending-home-sales-fell-1-5-in-october
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