October pending home sales hit a low point

The latest PHSI shows transactions are down 8.5% on a year-over-year basis.

11/29/2023

A snapshot of the October PHSI on a regional basis from the National Association of Realtors. (Click to enlarge.)

The latest Pending Home Sales Index (PHSI) fell 1.5% to 71.4 in October.

Released this morning by the National Association of Realtors, the new reading is the lowest number the index has hit since it was established in 2001.

The PHSI is a forward-looking indicator of home sales based on contract signings. Year over year, pending transactions declined 8.5%. An index of 100 is equal to the level of contract activity in 2001.

Elevated mortgage rates helped seal the deal in making October one of the worst months for home sales in history.

“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. Multiple offers, of course, yield only one winner, with the rest left to continue their search.”

Here’s how the PHSI performed on a regional basis:

The Northeast PHSI jumped 2.7% from September to 64.8 but fell 6.5% from October 2022.
The Midwest index edged ahead just 0.4% to 73.8 in October and is down 10.3% from one year ago.
The South PHSI decreased 1.9% to 85.6 in October while declining 7.1% from the prior year.
The West index fell 6% to 51.8 and decreased 10.8% from October 2022.

“Home sales are rising in places where more inventory is available,” Yun added. “Sales for properties priced above $750,000 were higher than a year ago, because there is more inventory at this price point than what we saw last October,” Yun said. “Additionally, newly built home sales are up 4.5% year-to-date due to homebuilders’ ability to create more inventory.”

New single-family home sales in October fell 5.6% to a seasonally adjusted annual rate of 679,000 compared to the revised September rate of 719,000, the U.S. Census Bureau and the Department of Housing and Urban Development reported on Monday.

But single-family permits increased 0.5% to a 968,000 unit rate last month.

“It is vital that we continue to focus on boosting housing supply by all means in all corners of the country over the coming months,” Yun added.