After a brief bounce in August, pending home sales slipped again in September.
Pending Home Sales Dropped -2.3% in September
After an +8% uptick in August’s pending home sales activity, pending sales slipped -2.3% in September, according to the National Association of REALTORS® (NAR) Pending Home Sales Index. This monthly Index downturn resulted in a level of 116.7, -8% below the Index level in September 2020.
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(An index level of 100 equals the level of pending sales contract activity in 2001.)
Slight Downturn in Pending Sales Indicating Calming Home Price Trend?
According to Lawrence Yun, chief economist with NAR, said, “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.”
Yun also added, “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.”
Inventory to Pick Up in 2022?
Yun believes that inventory scarcity will ease in 2022. Why?
Yun believes that buyers who have paused their home search right now will again return to the for-sale market in the coming year.
Yun also believes that the shortage of rental inventory plus increasing rent hikes will spur potential buyers to actually buy.
Yun said, “Rents have been mounting solidly of late, with falling rental vacancy rates. This could lead to more renters seeking homeownership in order to avoid rising inflation, so an increase in (for-sale) inventory will be welcomed.”
Declines in Pending Sales During September Hit All Regions of Country
Regionally, pending sales looked like this during September:
- Northeast – -3.2% m/m and -18.5% y/y
- Midwest – -3.5% m/m and -5.8% y/y
- South – -1.8% m/m and -5.8% y/y
- West – -1.4% and -7.2% y/y
2022 Expectations?
NAR anticipates home sales to have risen +6.4% by the end of 2021 and then to decline -1.7% due to likely higher mortgage interest rates in 2022.
NAR also anticipates that home prices will grow +2.8% in 2022.
Thanks to HousingWire and the National Association of REALTORS®.
