Pending home sales ascended in October, the third consecutive month of increases, according to the National Association of REALTORS® (NAR). All four major U.S. regions experienced month-over-month gains in transactions, with the Northeast leading the way. Year-over-year, contract signings increased in all four U.S. regions, led by the West.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, elevated 2% to 77.4 in October. Year-over-year, pending transactions expanded 5.4%. An index of 100 is equal to the level of contract activity in 2001.
“Homebuying momentum is building after nearly two years of suppressed home sales,” said NAR Chief Economist Lawrence Yun. “Even with mortgage rates modestly rising despite the Federal Reserve’s decision to cut the short-term interbank lending rate in September, continuous job additions and more housing inventory are bringing more consumers to the market.”
“Pending home sales ticked up in October as buyers took advantage of low rates early in the month,” said Realtor.com® Senior Economic Research Analyst Hannah Jones. “Mortgage rates were near 6.1% at the start of October, but reached 6.7% by the end of the month, bouncing back from September’s lows to the highest level since August. New home sales, which are also based on contract signings, plummeted 17.3% month-over-month and 9.4% year-over-year in October as buyers responded to worsening affordability and more existing-home options.
“Mortgage rates continued to climb through November, which means buyer activity could be slow through the end of the year. However, persistent buyers can take advantage of more for-sale inventory and less competition this winter and secure a home before the spring market picks up. Interestingly, a recent survey found that roughly one in five Republicans are more likely to purchase a home in response to Trump’s reelection, while one in four Democrats are less likely to do the same.”
PHSI regional breakdown
The Northeast PHSI jumped 4.7% from last month to 68.7, up 7.2% from October 2023. The Midwest index grew 4% to 77.8 in October, up 1.8% from the previous year. The South PHSI increased 0.9% to 90 in October, up 2.5% from a year ago. The West index edged higher by 0.2% from the prior month to 64.1, up 16.8% from October 2023.
“It’s encouraging to see contract signings increasing in all major regions of the country,” added Yun. “More notable gains from a year ago occurred in the expensive regions of the Northeast and West. The record-high stock market is providing a boost for upper-end homebuyers.”
Key highlights:
- Pending home sales in October increased 2%.
- Compared to one month ago, pending sales grew in all four major U.S. regions, led by the Northeast.
- Year-over-year, contract signings rose in all four U.S. regions, with the West showing the highest increase.
For the full report, click here.
