Pending Home Sales Fall 1.7% in October
According to the National Association of Realtors, pending home sales, which measures signed contract, fell 1.7% on October month-to-month. Pending home sales is a measure of signed contracts. On the other hand, sales were 4.4% higher annually. This is likely because mortgage rates are much lower this fall.
The average rate on the 30-year fixed mortgage was about 1% lower this October than last year. Rates did move slightly higher in October, which could account for some of the monthly drops. But a shortage of homes for sale could be the main reason. Lower rates overall this year have increased demand significantly, causing for-sale inventory to fall. Inventory had been rising at the start of this year, due to last year’s rate spike.
Lawrence Yun, the chief economist at the NAR, said, “We still need to address and, more importantly, correct inadequate levels of inventory across the country. There is no shortage of buyers seeking homes, but a lack of available units continues to drag down the nation’s housing market and the 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. Clearly, home builders must step in and construct more housing.”
Sales of newly built homes were significantly higher in October compared with October 2018. Builders are seeing strong demand and are trying to shift production to more affordable homes. Regionally, pending home sales in the Northeast rose 1.9% for the month and were 3% higher annually. In the Midwest, sales fell 2.7% monthly but were 1.8% higher annually. Sales in the South decreased by 1.7% monthly but were up 5.1% from a year ago. In the West, pending home sales fell 3.4% for the month but were 7.5% higher than October 2018.