Pending Home Sales Dip 1.5% to Lowest Level in 20 Years

(Illustration courtesy of the National Association of Realtors)

Pending home sales decreased again in October, down 1.5% from September, according to the National Association of Realtors.

The Pending Home Sales Index–a forward-looking indicator of home sales based on contract signings–dipped 1.5% to 71.4 in October, the lowest number since the index began in 2001. Year-over-year, pending transactions declined 8.5%. An index of 100 is equal to the level of contract activity in 2001.

The report said 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.

“During October, mortgage rates were at their highest and contract signings for existing homes were at their lowest in more than 20 years,” NAR chief economist Lawrence Yun said. “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.”

Yun noted home sales are rising in places where more inventory is available. “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, ” he said. 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,” he said.