Pending home sales fell unexpectedly in September

A sale sign hangs in front of a house in Miami.

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Pending home sales, a measure of signed contracts to purchase existing homes, fell an unexpected 2.3% in September compared to August, according to the National Association of Realtors.

Analysts had expected a slight monthly gain. Sales are down 8% compared to September 2020.

Pending sales is a forward-looking indicator of closed sales within one to two months.

Sales may have decreased due to higher mortgage rates. The average rate for 30-year fixed-rate mortgages fell below 3% in July and stayed there until the first week of September, according to Mortgage News Daily. Then it started to rise and crossed 3%, ending the month at 3.15%.

Buyers are also still dealing with rising home prices. Price gains were close to 20% year over year. However, there was a sign in August that the market was cooling, with fewer bidding wars and more stock being made available for sale.

“Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market runs comfortably ahead of pre-pandemic activity,” said Lawrence Yun, chief economist at NAR. “It is noteworthy that there will be less inventory until the end of the year compared to the summer months, which happens almost every year.”

Regionally, pending sales in the Northeast were down 3.2% month over month and down 18.5% from a year ago. In the Midwest, sales were down 3.5% for the month and 5.8% annually.

Sales transactions in the South are down 1.8% for the month and 5.8% from September 2020. Sales in the West are down 1.4% per month and 7.2% from a year ago.

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