Pending home sales decelerate as mortgage rates rise
NAR releases latest pending home sales index
Pending home sales retreated slightly in September as potential buyers paused their home search.
According to the National Association of Realtors, contract signings dropped 2.3% month over month and were 8% lower than a year ago. All four major regions reported a decline in both annual and monthly contract activity in September.
Month over month, pending home sales in the Northeast dwindled 3.2% to 93.1 in September, down 18.5% from last year. Sales in the Midwest fell 3.5% to 111.4, down 5.8% from a year ago. In the South, sales dipped 1.8% to 139.1, down 5.8% from September 2020. The West posted a 1.4% drop to 105.3, down 7.2% from the year before.
“Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market is running comfortably ahead of pre-pandemic activity,” said NAR chief economist Lawrence Yun. “It’s worth noting that there will be less inventory until the end of the year compared to the summer months, which happens nearly every year.”
Although housing supply stays low, Yun anticipates a turnaround in 2022.
“Rents have been mounting solidly of late, with falling rental vacancy rates,” he said. “This could lead to more renters seeking homeownership in order to avoid the rising inflation, so an increase in inventory will be welcomed.”
NAR projects home sales to have increased by 6.4% by year’s end before declining by 1.7% in 2022 due to rising mortgage rates. Yun also expects home prices to moderate to 2.8% next year after a double-digit price gain of 14.7% in 2021.
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