Lowest Contract Signings in Over Two Decades
In October, as mortgage rates surged to nearly 8%, many potential homebuyers retreated from the housing market. Consequently, contract signings for existing homes plunged to their lowest point in over two decades, according to a report from the National Association of REALTORS® (NAR). NAR's Pending Home Sales Index, which gauges home sales based on contract signings, plummeted by 1.5%, reaching its lowest level since its inception in 2001. Compared to the previous year, pending home sales dropped by 8.5%. Although mortgage rates have started to decline from their recent highs, potential buyers now face another challenge: a shortage of available homes. Despite the slowdown in sales, competition remains fierce, particularly for starter and mid-priced homes. Home sales are increasing in areas with more housing inventory, such as properties priced above $750,000 and newly built homes, where choices are more abundant. NAR emphasizes the need to boost housing supply across the country in the coming months. Existing inventory in October was 5.7% lower than the previous year, and homes are selling rapidly, with 66% of existing homes selling in less than a month and an average time on the market of just 23 days. In terms of regional trends, the Northeast was the sole region to experience an increase in home sales activity in October, while the rest of the nation witnessed a decline in contract signings, primarily in the West. All four major regions of the United States reported slower sales compared to the previous year.