Pending Home Sales Drop To Lowest on Record: NAR

Pending home sales fell in October to the lowest level since 2001, when the National Association of Realtors started tracking the housing activity.

Contract signings fell 1.5 percent from September to October, according to NAR’s monthly report. Pending deals dropped 8.5 percent year-to-year as NAR’s index fell to 71.4, the lowest mark reported since the trade group began tracking the metric in 2001.

The lack of activity was due to some familiar market foes: elevated mortgage rates, high home prices and low inventory. October ushered in some of the highest mortgage rates in decades, hovering around a dreaded 8 percent threshold.

In recent weeks, however, mortgage rates have come down slightly from those Halloween highs, a small bright spot as other factors continue to hamstring the housing market.

“Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied,” NAR chief economist Lawrence Yun said in a statement.

All four regions tracked by NAR recorded year-over-year declines in pending home sales, with three of the four also reporting month-to-month drops. The exception for the latter was the Northeast, which rose 2.7 percent from September (despite dropping 6.5 percent from last year). Yun said home sales were rising in places with more inventory.

Even when homebuyers can find an acceptable mortgage rate and an available home, prices are yet another obstacle to ownership. In September, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index rose 3.9 percent annually, 1.4 percentage points above the yearly gain recorded in August.

Home prices also rode a lack of inventory to a record high in September. Price growth is expected to moderate in the October index results after mortgage rates reached peaked ahead of Halloween.