After four consecutive months of contract activity growth, pending home sales experienced a minor decline. All four major U.S. regions however have recorded notable year-over-year increases. This according to the National Association of Realtors.
NAR’s Pending Home Sales Index measures the change in the number of homes under contract to be sold but still awaiting the closing transaction, excluding new construction. The PHSI fell 2.2% to 130.0 in September. An index of 100 is equal to the level of contract activity in 2001. 2001 was the first year examined.
“The demand for home buying remains super strong, even with a slight monthly pullback in September, and we’re still likely to end the year with more homes sold overall in 2020 than in 2019,” said Lawrence Yun, NAR’s chief economist. “With persistent low mortgage rates and some degree of a continuing jobs recovery, more contract signings are expected in the near future.”
“Additionally, a second-order demand will steadily arise as homeowners who had not considered moving before the pandemic begin to enter the market,” Yun said. “A number of these owners are contemplating moving into larger homes in less densely populated areas in light of new-found work-from-home flexibility.”
The report is the latest in findings that show the housing market cooled in September after showing being strong in the summer. Sales of existing homes fell as well according to NAR. The commerce Department said September sales of newly constructed homes also decreased. Despite the decline, contract signings climbed 20.5% compared to a year ago.
On a month-to-month basis in September, three of the four regional indices tracked by NAR recorded a decrease in contract activity. The Northeast was the only region to record month-over-month gains. The Northeast index grew to 119.4 in September. That is a growth of 2.0%, a 27.7% increase from September 2019. The PHSI in the South fell 3.0% to an index of 150.1 in September which is up 19.6% from September of last year. The index in the west slid 2.6% in September to 116.8 an increase of 19.3% from a year ago. The Midwest saw the index decrease 3.2% to 120.5 last month, up 18.5% when compared to a year ago. All four regions experienced double-digit year-over-year increases.
The next Pending Home Sales Index will be released by The National Association of Realtors on November 30.