Pending home sales fall to record low as high mortgage rates take a toll
NAHB CEO Jim Tobin discusses the state of the housing market, American homeownership and using family money for home down payment.
Signed contracts to buy previously owned homes in the U.S. fell last month to the lowest level on record as a spike in mortgage rates locked many would-be buyers out of the market.
The National Association of Realtors said Thursday that its pending home sales index decreased 1.5% in October to the lowest reading since the gauge was established in 2001. Economists surveyed by Refinitiv had expected contracts to decline by 2%.
«During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years,» said Lawrence Yun, NAR chief economist. «Recent weeks' successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied.»
Pending sales remain down 8.5% from the same time last year.
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A sign outside a home for sale in Atlanta, Georgia on September 6, 2023. (Photographer: Elijah Nouvelage/Bloomberg via Getty Images / Getty Images)
The report suggests that the housing market still has a long way to go before it recovers from the deep freeze that it entered as a result of the Federal Reserve's interest-rate hike campaign.
«Given that inventory levels remain low, and the real estate market generally slows heading into the holidays, pending home sales might not bounce right back from this low point,» said Kate Wood, a home and mortgage expert at NerdWallet.
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