Pending home sales fell slightly in October, according to the National Association of Realtors. Contract activity was mixed among the four major U.S. regions, with the only positive month-over-month growth happening in the South, although each region achieved year-over-year gains in pending home sales transactions.
The Pending Home Sales Index (PHSI),* www.nar.realtor/pending-home-sales, a forward-looking indicator of home sales based on contract signings, fell 1.1% to 128.9 in October, the second straight month of decline. Year-over-year, contract signings rose 20.2%. An index of 100 is equal to the level of contract activity in 2001.
“Pending home transactions saw a small drop off from the prior month but still easily outperformed last year’s numbers for October,” said Lawrence Yun, NAR’s chief economist. “The housing market is still hot, but we may be starting to see rising home prices hurting affordability.”
Both the inventory of homes for sale and mortgage rates are now at historic lows, according to Yun.
“The combination of these factors – scarce housing and low rates – plus very strong demand has pushed home prices to levels that are making it difficult to save for a down payment, particularly among first-time buyers, who don’t have the luxury of using housing equity from a sale to use as a down payment,” said Yun. “Work-from-home flexibility has also increased the demand for both primary and secondary homes.”
Realtor.com’s Housing Market Recovery Index, which reveals metro areas where the market has recovered or even exceeded January 20 levels, showed Las Vegas-Henderson-Paradise, Nev.; San Francisco, Calif.; Seattle-Tacoma-Bellevue, Wash.; San Jose-Sunnyvale-Santa Clara, Calif.; and Los Angeles-Long Beach-Anaheim, Calif., had enjoyed the most significant recovery as of November 14.
October Pending Home Sales Regional Breakdown
The Northeast PHSI slid 5.9% to 112.3 in October, a 18.5% increase from a year ago. In the Midwest, the index fell 0.7% to 119.6 last month, up 19.6% from October 2019.
Pending home sales in the South increased 0.1% to an index of 151.1 in October, up 21.0% from October 2019. The index in the West remained the same in October, at 116.8, which is up 20.8% from a year ago.