- Pending home sales dropped to their lowest level on record in October as mortgage rates remain high.
- The decline in pending home sales exceeds the drop seen during the 2008 housing bust.
- “Mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years,” the NAR said.
Pending home sales fell in October to its lowest level on record, exceeding the decline seen during the 2008 housing collapse. since the Pending Home Sales Index was created in 2001.
The Pending Home Sales Index fell 1.5% month-over-month in October, and declined by 8.5% year-over-year as mortgage rates remained elevated and supply stayed tight.
“During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years,” the National Association of Realtors’ chief economist Lawrence Yun said on Thursday.
The average 30-year mortgage rate approached 8% in October, according to data from Freddie Mac. But a decline in interest rates since then has pushed mortgage rates back down to about 7.3%. That slight decline in mortgage rates should help open up the housing market, but it’s likely still not enough to completely thaw the frozen 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. Multiple offers, of course, yield only one winner, with the rest left to continue their search,” Yun said.
On a regional basis, pending home sales saw a 2.7% gain int he Northeast, while monthly declines were observed throughout the rest of the country.
One sweet spot of the housing market that is seeing increased sales is homes priced above $750,000, as there is more inventory of those homes, according to Yun. Newly built home sales are also on the rise, jumping 4.5% year-to-date as homebuilders build more homes.
But those gains are not enough to satiate the demand for a large chunk of the population, much of which has been boxed out of the housing market as rates stay elevated.