Pending home sales continued to fall in October, recording a 4.6% month-over-month drop that resulted in an index reading of 77.1, according to data released Wednesday by the National Association of Realtors.
This is the fifth consecutive month of declines. Pending home sales have now fallen in 11 of the last 12 months.
Year over year, the PHSI was down 37.0%, marking the 17th consecutive month of annual declines. An index of 100 is equal to the level of contract activity in 2001.
“October was a difficult month for home buyers as they faced 20-year-high mortgage rates,” Lawrence Yun, NAR’s chief economist, said in a statement.
In recent weeks, however, mortgage rates have dipped back into the 6.0% range, leading experts believe this may result in a slower pace of year-over-year pending home sales declines in coming months.
“Pending home sales have fallen again, but one thing that has recently happened is that mortgage rates have fallen recently, and for the first time since rates rose, we have had 4 straight weeks of growth in the purchase application data,” Logan Mohtashami, HousingWire’s lead analyst, said. “This data looks out 30-90 days, so we might see this show up more in the January and February data. The year-over-year declines in the purchase apps data have also stopped going lower. Context is critical. We work from an extremely low bar in pending home sales and purchase apps. However, still an encouraging sign.”
On a month over month basis, three out of the four major U.S. regions recorded declines, with the West recording the largest monthly decline at 11.3% to a reading of 55.6. The Midwest was the only region to record a monthly gain, rising 3.3% from September to a reading of 83.5. Year over year, all four regions experienced declines, with the West recording the largest drop at 46.2%.
“The West region, in particular, suffered from the combination of high interest rates and expensive home prices,” Yun said. “Only the Midwest squeaked out a gain.”