Pending home sales dipped in September, retreating slightly following a previous month of growth, according to the National Association of Realtors (NAR). Each of the four major U.S. regions saw contract activity decline month-over-month and year-over-year, with the Northeast weathering the largest yearly drop.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, decreased 2.3 percent to 116.7 in September. Year-over-year, signings decreased 8.0 percent. 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,” said 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.”
Although housing supply remains low, Yun says he expects inventory to turn the corner in 2022.
“Rents have been mounting solidly of late, with falling rental vacancy rates,” Yun said. “This could lead to more renters seeking homeownership in order to avoid the rising inflation, so an increase in inventory will be welcomed.”
Realtor.com’s Hottest Housing Markets data revealed that out of the largest 40 metros, the most improved metros over the past year, as of October 21, were Orlando-Kissimmee-Sanford, Florida; Jacksonville, Florida; Tampa-St. Petersburg-Clearwater, Florida; Nashville-Davidson-Murfreesboro-Franklin, Tennessee; and Denver-Aurora-Lakewood, Colorado.
Once all home sale data has been tabulated by year’s end, NAR expects home sales to have risen by 6.4 percent in 2021; and due to higher anticipated mortgage rates, NAR projects sales to then decline by 1.7 percent in 2022. Yun says home prices will moderate with only 2.8 percent growth in 2022 after a double-digit price gain of 14.7 percent in 2021.
September Pending Home Sales Regional Breakdown
Month-over-month, the Northeast PHSI fell 3.2 percent to 93.1 in September, an 18.5 percent decline from a year ago. In the Midwest, the index dropped 3.5 percent to 111.4 last month, down 5.8 percent from September 2020.
Pending home sales transactions in the South decreased 1.8 percent to an index of 139.1 in September, down 5.8 percent from September 2020. The index in the West declined 1.4 percent in September to 105.3, down 7.2 percent from a year prior.