- Pending home sales fell in October to their lowest level since the National Association of Realtors began tracking them in 2001.
- Mortgage rates rose sharply in October, with the average 30-year fixed loan briefly rising over 8%.
- Interest rates have since declined but are still above 7%, but supply is still tight.
Pending home sales, a measure of signed contracts on existing homes, fell 1.5% in October from September.
They reached their lowest level since the National Association of Realtors began measuring the metric in 2001, meaning they are even worse than levels during the financial crisis more than a decade ago. Sales fell 8.5% compared to October last year.
Because the index measures signed contracts, it is the most recent indicator of housing demand. It reflects buyers who went shopping in October, when the popular 30-year fixed mortgage rate briefly shot above 8%.
Rates have since fallen to around 7.3%, according to Mortgage News Daily. Real estate agents continue to say that not only high interest rates but also the still low supply of homes for sale are slowing activity.
“The gradual decline in mortgage rates in recent weeks will help qualify more home buyers, but limited housing inventory significantly prevents housing demand from being fully met,” Lawrence Yun, NAR chief economist, said in a news release. “If there are multiple offers, there is of course only one winner, the rest have to keep looking.”
Pending sales declined month-over-month in all regions except the Northeast. They fell most sharply in the West, where houses are most expensive. Sales were down everywhere compared to the previous year.
Tight supply and still strong demand are keeping pressure on real estate prices, which not only continue to reach new highs but also appear to be accelerating their growth.
Agents noted that sales of homes priced above $750,000 have increased simply because there is more supply at the higher end of the market.