Pending home sales rebound on fast-rising rents, mortgage rates
Contract signings rose at strongest pace in Midwest and South regions
Pending home sales rebounded in October, motivated by fast-rising rents and an anticipated increase in mortgage rates.
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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.
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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.