WASHINGTON (November 30, 2022) – Pending home sales fell for the fifth straight month in October, according to the National Association of REALTORS®. Three of his four regions in the US posted month-over-month declines, and all four regions posted year-over-year declines.
Pending Home Sales Index (PHSI)*, www.nar.realtor/pending-home-sales, a forward-looking measure of home sales based on contract signings, fell 4.6% in October to 77.1. Pending deals decreased by 37.0% year-on-year. An index of 100 equals the level of contract activity in 2001.
“October was a difficult month for homebuyers as they faced the highest mortgage rates in 20 years,” said NAR chief economist Lawrence Yun. It suffered from a combination of house prices. Only the Midwest made a profit.”
“Mortgage rates have already peaked and appear to have been declining since mid-November, which should keep buyers coming back in the coming months.”
Regional breakdown of pending home sales
The Northeast PHSI fell 4.3% from last month to 68.7, down 29.5% from October 2021. The Midwest index rose 3.3% to 83.5 in his October, down 32.1% from a year ago.
The Southern PHSI fell 6.4% to 90.6 in October, down 38.2% from the previous year. The Western Index fell 11.3% to 55.6 in October, down 46.2% from October 2021.
The National REALTORS® Association is America’s largest trade association representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industry.
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*The Pending Home Sales Index is a leading indicator for the housing sector based on pending sales of existing homes. If a contract has been signed but the transaction has not been completed, the sale will be listed as pending, but the sale will typically be completed within 1-2 months of signing.
Pending deals are a good early indicator of upcoming sales closures. However, the time from pending contract to sale completion is not the same for all home sales. Variation in the length of the process from pending contract to closing of the sale can be caused by issues such as the buyer’s difficulty obtaining mortgage financing, home inspection issues, or valuation issues.
The index is based on a sample covering approximately 40% of the monthly multiple listing service data. In developing the index’s model, it was demonstrated that the level of sales contract activity each month paralleled the level of existing home sales in the next two months.
An index of 100 equals the average level of contract activity in 2001, the year first surveyed. Coincidentally, the volume of pre-owned home sales in 2001 fell within the 5 million to 5.5 million range that is considered normal for the current US population.
Note: Existing Home Sales for November will be reported on December 21st. The next pending home sales index will be reported on December 28th. All release times are 10am ET.