Pending home sales rebounded in October, motivated by fast-rising rents and an anticipated increase in mortgage rates.
According to the National Association of Realtors' pending home sales index, which tracks the number of homes that are under contract to be sold, rose 7.5% to a reading of 125.2, but are down 1.4% year-over-year. An index of 100 is equal to the level of contract activity in 2001.
Contract signings rose at the strongest pace in the Midwest and South regions, climbing 11.8% to 124.6 and 8% to 149.7, respectively. Meanwhile, pending home sales in the Northeast increased 6.9% to 99.5, a 10% drop compared to a year ago, and grew 2.1% in the West to 107.5, down 6.2% year-over-year.
The latest real estate data comes after existing home sales rose 0.8% in October to a seasonally adjusted rate of 6.34 million units, the fastest pace since January.
Total housing inventory in October fell 0.8% month-over-month and 12% year-over-year to 1.25 million units. Unsold inventory, which is at a 2.4-month supply at the current sales pace, remains unchanged from the previous month and is down from 2.5 months a year ago.
"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," NAR chief economist Lawrence Yun said in a statement. "The notable gain in October assures that total existing-home sales in 2021 will exceed 6 million, which will shape up to be the best performance in 15 years."
Though the market is expected to remain robust, Yun forecasts home prices will rise at a gentler pace over the course of the next several months and expects milder demand as mortgage rates increase. The average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.07% in October, up from 2.90% in September, according to Freddie Mac.