Pending home sales made a comeback in October, rebounding after a decline in September, according to the National Association of Realtors (NAR). The Pending Home Sales Index (PHSI) rose 7.5% to 125.2 in October. An index reading of 100 is equal to the level of contract activity in 2001. On a year-over-year basis, signings fell 1.4%.
“Motivated by fast-rising rents and the anticipated increase in mortgage rates, consumers that are on strong financial footing are signing contracts to purchase a home sooner rather than later,” says NAR chief economist Lawrence Yun. “This solid buying is a testament to demand still being relatively high, as it is occurring during a time when inventory is still markedly low. The notable gain in October assures that total existing-home sales in 2021 will exceed 6 million, which will shape up to be the best performance in 15 years.”
While the market is expected to remain robust, Yun forecasts home prices will rise at a more gentle pace over the course of the next several months and projects demand to be more mild as mortgage rates increase.
Contract activity rose month over month in each of the four major U.S. regions but only grew on a year-over-year basis in the Midwest and South.
Contracts rose at the strongest pace in the Midwest, increasing 11.8% to 124.6 compared with September and up 5.1% from October 2020. Pending home sales transactions in the South rose 8% month over month to 149.7 in October and rose 0.6% on a year-over-year basis. The Northeast PHSI increased 6.9% to 99.5 in October, a 10% decrease from a year ago. The index in the West grew 2.1% in October to 107.5 but decreased 6.2% from October 2020.
NAR data revealed that out of the largest 40 metros, the most improved metros over the past year were Orlando-Kissimmee-Sanford, Florida; Jacksonville, Florida; Tampa-St. Petersburg-Clearwater, Florida; Dallas-Fort Worth-Arlington, Texas; and Nashville-Davidson, Tennessee.