Pending home sales rebounded strongly in October, after three straight months of declines.
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The National Association of Relators’ (NAR) Pending Home Sales Index rose 3.5% to 109.3 in October, up from the downwardly-revised 105.6 in September. Though the reading is its highest since June and a bright spot in the economy, it was still lower (0.6%) than the same period last year.
All major regions in the nation, excluding the West, saw an increase in contract signings in October. The rise in pending sales in the month was driven mainly by strength in the southern region of the U.S., which bounced back considerably following the devastating hurricane-related disruptions, according to NAR chief economist Lawrence Yun.
“Last month’s solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months,” he said. “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.”
Overall activity drastically lags demand, even as homebuilders try their hardest to increase production of single-family homes, while contending with labor and cost challenges, Yun said.
Additionally, homeowners are tending to stay in their homes for longer periods of time. Last month, an NAR survey found that homeowners, on average, stayed in their home for 10 years before selling—an all-time high for the survey. Before 2009, sellers lived in their house for an average of six years before selling.
“Existing inventory has decreased every month on an annual basis for 29 consecutive months, and the number of homes for sale at the end of October was the lowest for the month since 1999,” said Yun. “Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand.”