On-the-fence buyers fearful of rising mortgage rates and rental costs pushed pending sales up 7.5%; 2021 could now break a 15-year record for housing sales.
WASHINGTON – Pending home sales increased in October, rebounding after a decline in September, according to the National Association of Realtors® (NAR), with contract activity up month-over-month in each of the four major U.S. regions.
On a year-over-year basis, however, transactions were split: two regions reported drops and two others posted gains.
The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – rose 7.5% to 125.2 in October. Year-over-year, however, signings fell 1.4%. An index of 100 is equal to the level of contract activity in 2001.
“Motivated by fast-rising rents and the anticipated increase in mortgage rates, consumers on strong financial footing are signing contracts to purchase a home sooner rather than later,” says Lawrence Yun, NAR’s chief economist. “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 strong showing 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,” Yun adds.
While the market should remain robust, Yun forecasts home prices will rise at a gentler pace over the course of the next several months and expects demand to be milder as mortgage rates increase.
Realtor.com’s Hottest Housing Markets data found three Florida metro areas in its “most improved” over the past year: Orlando-Kissimmee-Sanford, Jacksonville, Tampa-St. Petersburg-Clearwater, Dallas-Fort Worth-Arlington in Texas and Nashville-Davidson in Tennessee.
Regional breakdown: Compared to the previous month, contract signings rose at the strongest pace in the Midwest and South regions. Month-over-month, the Northeast PHSI increased 6.9% to 99.5 in October, though it fell 10% from a year ago. In the Midwest, the index climbed 11.8% to 124.6, which is also up 5.1% year-to-year.
Pending home sales transactions in the South rose 8.0% to an index of 149.7 in October, which is also up 0.6% from October 2020. The index in the West grew 2.1% in October to 107.5, though it dropped 6.2% year-to-year.
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