Chief Economist Yun: The overall market is still running comfortably ahead of pre-pandemic levels, and the drop is a sign of a “calmer home price trend.” However, there will continue to be less inventory through the end of the year – a normal fall drop following the summer months.
WASHINGTON – Pending home sales dipped in September after an increase in August, just one month before. Each of the four major regions the National Association of Realtors® (NAR) tracks for the report saw fewer sales month-over-month and year-over-year.
The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – decreased 2.3% to 116.7 in September. Year-over-year, signings decreased 8.0%. An index of 100 is equal to the level of contract activity in 2001.
“Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market is running comfortably ahead of pre-pandemic activity,” says Lawrence Yun, NAR’s chief economist. “It’s worth noting that there will be less inventory until the end of the year compared to the summer months, which happens nearly every year.
“Some potential buyers have momentarily paused their home search with intentions to resume in 2022,” Yun adds.
While housing supply remains low, Yun expects inventory to turn a corner in 2022.
“Rents have been mounting solidly of late with falling rental vacancy rates,” Yun says. “This could lead to more renters seeking homeownership in order to avoid the rising inflation, so an increase in inventory will be welcomed.”
Once all home sale data has been tabulated by year’s end, NAR expects home sales to have risen by 6.4% in 2021. In its projection for 2022, NAR now projects sales to decline by 1.7% due to higher anticipated mortgage rates. Yun says home prices will moderate, and prices will rise only 2.8% in 2022 after a double-digit price gain of 14.7% this year.
September pending sales regional breakdown: Month-over-month, the Northeast PHSI fell 3.2% to 93.1 in September, an 18.5% decline from a year ago. In the Midwest, the index dropped 3.5% to 111.4 last month, down 5.8% from September 2020.
Pending home sales transactions in the South decreased 1.8% to an index of 139.1, down 5.8% from September 2020. The index in the West declined 1.4% in September to 105.3, down 7.2% from a year prior.
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