Following three consecutive months of declines, pending home sales rebounded strongly in October. But contract signings are still sliding behind levels from a year ago as potential home buyers continue to get frustrated at the lack of inventory.
The National Association of REALTORS® reported that its Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 3.5 percent to a reading of 109.3 in October. The index is at its highest reading since June, but is still 0.6 percent below a year ago. Last month’s uptick in pending home sales was mostly fueled by a significant increase in the South, which saw a rebound after hurricane-related disruptions in September, NAR reports. The South saw a 7.4 percent month-over-month increase in October and is now 2 percent higher than a year ago.
“Last month’s solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months,” says Lawrence Yun, NAR’s chief economist. “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.”
Inventory levels remained problematic this fall for home shoppers.
“Existing inventory has decreased every month on an annual basis for 29 consecutive months, and the number of homes for sale at the end of October was the lowest for the month since 1999,” Yun says. “Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand.”