After dipping in September, pending home sales jumped +7.5% in October.
Pending Home Sales Recoil in October
According to the latest report from the National Association of REALTORS® (NAR), pending home sales jack-knifed +7.5% m/m in October after dipping -2.3% in September.
NAR’s Pending Home Sales Index, a leading indicator for future home sales, hit 125.2 in October and increased +7.5% m/m. Overall, pending home sales were down -1.4% y/y.
Lawrence Yun, NAR’s chief economist, said, “This solid buying is a testament to demand still being relatively high, as it is occurring during a time when inventory is still markedly low.”
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Regional Rebounds of Pending Home Sales
All four regions of the country tracked by NAR experienced an uptick in pending home sales during October.
Here’s a regional breakdown of October’s pending home sales:
- Midwest – +11.8% m/m; +5.1% y/y
- South – +8.0% m/m; up just slightly y/y
- Northeast – +6.9% m/m; -10% y/y
- West – +2.1% m/m; -6.2% y/y
NAR’s Market Forecast
According to NAR’s latest market forecast, home price growth is expected to slow as mortgage rates continue to rise over the next few months.
In the immediacy of end-or-year predictions, Yun said, “The notable gain in October’s (pending home sales) assures that total existing-home sales in 22021 will exceed 6M, which will shape up to be the best performance in 15 years.”
The housing market as a whole, according to NAR’s latest report, is expected to remain “robust.”
Federal Agencies Forced to Update Standards to Reflect New Market Realities
According to George Ratiu, Realtor.com manager of economic research, federal agencies have had to revamp their standards to better mirror current market realities.
The Federal Housing Finance Agency has updated the loan limits for Freddie Mac and Fannie Mae-backed mortgages to reflect the fact that home prices have skyrocketed during the pandemic. Most of the country will see loan limits jump from $548,250 in 2021 to $625,000 in 2022.
Ratiu said, “The higher limits will give buyers who face higher-priced homes the opportunity to qualify for a conforming mortgage, which provides for lower down payments and better mortgage rates, among other benefits. However, over the longer term, housing needs a larger investment in new construction to overcome the significant supply shortage.”
Thanks to the National Association of REALTORS® and Inman.
