By Nathalie Voit
Pending home sales in October jumped 7.5% from September, according to data from the National Association of Realtors (NAR). Contract activity in October rebounded nationwide as demand for new housing remained relatively high despite rising mortgage rates.
According to the Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, pending sales rose 7.5% in October to 125.2. A baseline measure of 100 indicates the level of contract activity in 2001. Year-over-year, signings were 1.4% lower.
“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.
Total existing-home sales in 2021 will exceed six million, rendering this year’s housing market the hottest in 15 years, said Yun.
“The notable gain in October assures that total existing-home sales in 2021 will exceed six million, which will shape up to be the best performance in 15 years,” Yun added.
Contract signings in all four major regions of the country increased, with the most robust sales recorded in the Midwest and the South. Month-over-month, contract signings rose 11.8% in the Midwest and 8.0% in the South. Compared to October of last year, pending home sales transactions increased 5.1% in the Midwest and 0.6% in the South.
Pending sales in the West and Northeast increased compared to the previous month but lagged on an annual basis. The West PHSI grew 2.1% in October, a 6.2% decline from last year. The index in the Northeast climbed 6.9% in October, down 10% from October 2020.
Homebuying activity was particularly strong in Florida, which saw the Orlando-Kissimmee-Sanford, Jacksonville, and the Tampa-St. Petersburg-Clearwater metro areas top the list of this year’s most improved metros.
Meanwhile, the Mortgage Bankers Association reported that the average 30-year fixed mortgage rate climbed four basis points to 3.24% during the week ending on Nov. 19. Mortgage rates have since fallen following news of the new Omicron strain of the COVID-19 virus.
“The financial markets continue to discern the Federal Reserve’s policy path in the coming months in light of the current high growth, high inflation environment. Despite a fair amount of rate volatility last week, mortgage rates were higher, with the 30-year fixed rate increasing four basis points to 3.24 percent,” said MBA’s Associate Vice President of Economic and Industry Forecasting Joel Kan on Nov. 24.
“Purchase activity increased for the third straight week, as housing demand remains robust, even as the housing market approaches the typically slower holiday season,” Kan added.
