The number of contract signatures increased 7.5% from September to October, reports the National Association of Realtors.
Pending home sales rebounded in October after falling sharply the month before, as the housing market continued to tumble through one of its strongest years in recent memory.
The number of contract signatures in October rose 7.5% after dropping in September, falling a little below where they were last year, according to the latest report from the National Association of Realtors. The previous month, pending sales had fallen 2.3%.
“October’s notable gain ensures that total sales of existing homes in 2021 will exceed 6 million, which will be the best performance in 15 years,” NAR chief economist Lawrence Yun said in a statement. .
The trade group’s pending home sales index – which uses contract signatures as a leading indicator of future home sales – was 125.2 last month, up 7.5% from the previous month but down 1.4% from the same period last year.
According to the group’s latest forecasts, home price growth is expected to slow over the next few months against a backdrop of continuing rising mortgage rates. The market itself is expected to remain “robust”, according to the report.
“This strong purchase is a testament to the fact that demand is still relatively high, as it occurs at a time when stocks are still significantly low,” Yun said in the statement.
Buyers in October may have been prompted to act by multiple factors, including rapidly rising rents across the country and mortgage rates set to rise from now on, Yun said.
As prices skyrocketed during the pandemic, federal agencies were forced to update their standards to reflect new market realities, according to Realtor.com director of economic research George Ratiu.
The Federal Housing Finance Agency has updated the loan limits for mortgages guaranteed by Freddie Mac and Fannie Mae. In most parts of the country, the limit will drop from $ 548,250 this year to $ 625,000 in 2022.
“The higher limits will give buyers who face higher priced homes the opportunity to qualify for a compliant mortgage, which features lower down payments and better mortgage rates, among other benefits,” Ratiu said in a statement. communicated. “However, in the longer term, housing needs a larger investment in new construction to overcome the severe shortage of supply.”
The Midwest dominated the country in terms of pending home sales growth, but all four regions tracked by NAR were part of the rebound.
The Midwestern states saw pending home sales increase 11.8% from September to October, and 5.1% from their October 2020 levels.
The South was also up slightly from a year ago, posting an 8.0% month-over-month gain.
In the northeast, pending home sales rose 6.9% from September. Yet that number was 10 percent lower than it was a year ago.
The West also saw lower monthly gains than a year ago, rising 2.1% month over month. Pending sales in the western states were down 6.2% year over year.
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