The National Association of Realtors (NAR) reported that its
Pending Home Sales Index (PHSI) dropped by 2.6 percent to 102.1 in October, down from 104.8 in September. Compared to one year earlier, the PHSI was down by 6.7 percent, which made October the 10th consecutive month of annual decreases.
On a regional basis, the PHSI in the Northeast was the only one to record an annualized increase, albeit a relatively modest 0.7 percent uptick to 92.9 in October. The Midwest index fell 1.8 percent to 100.4, the index in the South fell 1.1 percent to an index of 118.9 and the index in the West decreased 8.9 percent to 84.8.
“The recent rise in mortgage rates have reduced the pool of eligible homebuyers,” said NAR Chief Economist Lawrence Yun. “However, mortgage rates are much lower today compared to earlier this century, when mortgage rates averaged eight percent. Additionally, there are more jobs today than there were two decades ago. So, while the long-term prospects look solid, we just have to get through this short-term period of uncertainty.”
Mortgage Bankers Association (MBA) Chief Economist Mike Fratantoni said, "We continue to view the current slowdown in the housing market, led by a halt in October contract signings in the West, as a healthy deceleration in the market. Home prices had galloped ahead of wage growth for too long, particularly in the coastal markets. Now, with the job market quite strong, and sellers recalibrating how aggressive to be with list prices, the housing market is seeking to find its footing. However, while inventory remains tight, the underlying demand fundamentals remain strong. We expect the pause in activity to end next year.”
