Pending home sales picked up steam in October, up 3.5 percent in the National Association of REALTORS® (NAR) Pending Home Sales Index (PHSI). The PHSI posted 109.3 in October, up from 105.6 in September; however, sales were 0.6 percent lower year-over-year. The Index is based on contract signings.
“Last month’s solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months,” says Lawrence Yun, chief economist of NAR. “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.”
“Pending home sales benefited from a strong post-hurricane bounce-back in the South in October,” says Danielle Hale, chief economist of realtor.com®. “The rest of the country continued to see year-over-year declines in pending home sales as depleted inventory continues to challenge would-be buyers, especially millennials.”
All but one of the four major regions in the U.S. saw increases in the PHSI in October, with the Northeast up 0.5 percent to 95.0, the Midwest up 2.8 percent to 105.8, and the South up 7.4 percent to 123.6. The West saw a decrease, 0.7 percent to 101.6.
“Existing inventory has decreased every month on an annual basis for 29 consecutive months, and the number of homes for sale at the end of October was the lowest for the month since 1999,” Yun says. “Until new-home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand.”
There is hope for inventory. A forecast by realtor.com suggests supply will tread upward in 2018.
“[Realtor.com] is predicting that relief may be on the horizon,” Hale says. “We expect to see slowing inventory declines into 2018 and an increase in the number of homes for sale in fall. Inventory is expected to recover first among higher-priced homes, so entry-level buyers will continue to face challenges in 2018, but the eventual lift in available homes is expected to push home sales up 2.5 percent next year.”
For more information, please visit www.nar.realtor.
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