October’s pending home sales rebounded slightly after a three-month decline, according to the latest report from the National Association of Realtors.
The Pending Home Sales Index rose 3.5 percent from 105.6 in September to 109.3 in October. This is 0.6 percent below October 2016’s level but is the highest rate since June 2017.
“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,” Lawrence Yun, NAR 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.”
Homebuilders have been increasing production of single-family homes across the country, but overall activity still is outpaced by demand due to labor and cost challenges, according to Yun. Additionally, homeowners are staying in their homes for longer than previous years before selling, contributing to the nationwide inventory shortage.
“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,” said Yun. “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.”
Yun notes that the bounceback in pending home sales was mainly due to a surge in the South after hurricane-related disruptions in September. Pending home sales are up 7.4 percent in the South compared to September and 2 percent higher than last year.
Yun expects existing home sales to finish the year 1.3 percent higher than 2016 to about 5.52 million, and the national median existing home price is expected to increase around 6 percent. In 2016, existing sales increased 3.8 percent and prices grew 5.1 percent year-over-year.