The National Association of Realtors’ monthly Pending Home Sales Index fell by 1.1% from September to October, down to 128.9 for October. The Index is measured relative to a reading of 100, equal to the level of contract activity at the index’s start in 2001.
On a year-over-year basis, contract singings have risen by 20.2% since October 2019. “Pending home transactions saw a small drop off from the prior month but still easily outperformed last year’s numbers for October,” says 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 for-sale home inventory and mortgage rates have fallen to historic lows, Yun says. “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. Work-from-home flexibility has also increased the demand for both primary and secondary homes.”
Contract performance is mixed across the four regions month over month. Only the South showed any gain in pending home sales, with 0.1% month-to-month growth to a reading of 151.1 in October. The Northeast PHSI fell 5.9% to 112.3 in October, while the Midwest’s index fell 0.7% to 119.6 and the West remained flat at 116.8. All four regions saw strong gains year over year, with the South in the lead at 21% growth from October 2019.
Realtor.com’s Housing Market Recovery Index, which measures metro areas by performance relative to January 2020, showed that 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., have experienced the strongest housing market recoveries as of Nov. 14.
