Pending Home Sales Inched Up 0.1% in October

Washington, DC, November 30, 2016—Pending home sales were mostly unchanged in October, but did squeak out a meager 0.1% gain for the second consecutive month, according to the National Association of Realtors.

The Pending Home Sales Index inched up to 110.0 in October from a slight downward revision of 109.9 in September. With last month's small increase, the index is now 1.8% higher than last October (108.1). 

Lawrence Yun, NAR chief economist, says October's minuscule uptick in contract activity nudged pending sales up to their highest level since July (111.2). "Most of the country last month saw at least a small increase in contract signings and more notably, activity in all four major regions is up from a year ago," added Yun. "Despite limited listings and steadfast price growth that's now carried into the fall, buyer demand has remained strong because of the consistently reliable job creation in a majority of metro areas." 

On the topic of housing supply—which has been grossly inadequate all year—Yun explains that the unwelcoming but expected seasonal retreat in new listings is now arriving at a time when price growth remains around triple the pace of wages and properties continue to sell at a much faster pace than a year ago. Furthermore, highlighting the heightened imbalance of supply in relation to demand, 40% of sales in October sold at or above list price, an increase from 33% last October.

"Many of the successful shoppers in October likely had to move fast and outbid others for the few listings available in the affordable price range," explained Yun. "Those obtaining a mortgage last month were likely the last group of buyers to lock in a rate near historically low levels now that rates have marched to around 4 percent since the election."