Pending home sales increased in October, rebounding after a decline in September, according to the National Association of Realtors.
Contract activity rose month-over-month in each of the four major U.S. regions. On a year-over-year basis, however, transactions were split, as 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, 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 that are on strong financial footing are signing contracts to purchase a home sooner rather than later," said 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 notable gain 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."
While the market is expected to 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 revealed that of the largest 40 metros, the most improved metros over the past year as of Nov. 18 were Orlando-Kissimmee-Sanford, Fla.; Jacksonville, Fla.; Tampa-St. Petersburg-Clearwater, Fla.; Dallas-Fort Worth-Arlington, Texas, and Nashville-Davidson, Tenn.
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, a 10% drop from a year ago. In the Midwest, the index climbed 11.8% to 124.6 last month, up 5.1% from October 2020.
Pending home sales transactions in the South rose 8% to an index of 149.7 in October, up 0.6% from October 2020. The index in the West grew 2.1% in October to 107.5, down 6.2% from a year prior.
First American Deputy Chief Economist Odeta Kushi said that, overall, the housing market continues to favor sellers over buyers.
“Even as rates increased in October, the housing market remained a competitive sellers’ market,” she said. “Demand remains high against a very limited number of homes for sale. A high velocity of sales, as indicated by lower days on market, explains a housing market characterized by higher sales and lower inventory.”
The National Association of Realtors is America's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.
