Pending homes sales in the US down for 10th month in a row
Pending home sales in the United States declined slightly in October in all regions but the Northeast, marking 10 months on a row of falling transactions, the latest index data shows.
The pending homes sales index from the National Association of Realtors, a forward looking indicator based on contract signings, decreased 2.6% in October, and year on year it was down 6.7%.
According to Lawrence Yun, NAR chief economist, the recent rise in mortgage rates have reduced the pool of eligible home buyers and he warned that they are probably going to increase even further in 2019.
While the short term outlook is uncertain, Yun stressed that he is very optimistic about the long term outlook and pointed out that current home sales levels match sales in 2000.
‘However, mortgage rates are much lower today compared to earlier this century, when mortgage rates averaged 8%. Additionally, there are more jobs today than there were two decades ago. So, while the long term prospects look solid, we just have to get through this short term period of uncertainty,’ he explained.
All four major regions saw a decline when compared to a year ago, with the West seeing the most pronounced drop. Yun said that decline is not at all surprising. ‘The West region experienced the fastest run-up in home prices in a short time and therefore, has essentially priced out many consumers,’ he pointed out.
A breakdown of the figures show that sales in the Northeast rose 0.7% in October and are now 2.9% below a year ago while in the Midwest they fell 1.8% and are 4.9% lower than October 2017.
Pending home sales in the South fell 1.1% and are 4.6% lower than a year ago while in the West they decreased 8.9% and fell 15.3% below a year ago.