Pending home sales tiptoed up a scant 0.1 percent in October, according to the National Association of REALTORS® (NAR), continuing a two-month streak of gains that now land NAR’s Pending Home Sales Index (PHSI) at 110.0, or 1.8 percent higher than last October.
“Most of the country last month saw at least a small increase in contract signings and, more notably, activity in all four major regions is up from a year ago,” says Lawrence Yun, NAR chief economist. “Despite limited listings and steadfast price growth that’s now carried into the fall, buyer demand has remained strong because of the consistently reliable job creation in a majority of metro areas.”
Contributing to current pending home sales activity, Yun notes, is the persistence of overly-lacking supply—expected this time of year—combined with fast-moving inventory and stagnant wages. Forty percent of sales sold at or above list price in October.
“Many of the successful shoppers in October likely had to move fast and outbid others for the few listings available in the affordable price range,” Yun says. “Those obtaining a mortgage last month were likely the last group of buyers to lock in a rate near historically low levels now that rates have marched to around 4 percent since the election.”
Pending home sales activity in October varied region to region, according to the Index. Sales in the Midwest rose 1.6 percent to 106.3 (1.2 percent higher than last October), sales in the West rose 0.7 percent to 108.3 (2.5 percent higher), and sales in the Northeast rose 0.4 percent to 96.9 (3.9 percent higher). Sales in the South, however, fell 1.3 percent to 120.1 (0.8 percent higher).
Existing sales in 2016, Yun expects, will total roughly 5.36 million, exceeding 2015’s 5.25 million and reaching their highest level since 2006’s 6.48 million.
“Low supply has kept prices elevated all year and has put pressure on the budgets of buyers,” says Yun. “With mortgage rates expected to rise into next year and put added strain on affordability, sales expansion will be contingent on more inventory coming onto the market and continued job gains.”
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