Pending home sales decreased 1.5% in October, falling to the lowest level since the National Association of Realtors (NAR) began tracking data in 2001.
The Pending Home Sales Index (PHSI)—a forward-looking indicator of home sales based on contract signings—fell to 71.5 in October. An index reading of 100 is equal to the level of contract activity in 2001. On a year-over-year basis, pending transactions declined 8.5%.
“During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years,” says Lawrence Yun, the NAR’s 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.”
On a regional basis, pending sales in the Northeast increased 2.7% on a month-over-month basis but declined 6.5% compared with October 2022. The Midwest PHSI fell 0.4% and 10.3% on a month-over-month and year-over-year basis, respectively.
The index decreased 1.9% in the South compared with September and was 7.1% lower compared with October 2022 levels. The West PHSI fell 6% from the previous month and was 10.8% lower on a year-over-year basis.
“Home sales are rising in places where more inventory is available,” says Yun. “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 home builders’ 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.”
