According to the National Association of Realtors, September’s Pending Home Sales, which is a measure of existing home buyers who have signed contracts, dropped unexpectedly by 2.3% from August.
Analysts had predicted a modest monthly gain. Comparing September 2020, sales were 8.8% lower.
The indicator that closed sales will be within one or two months is the pending sales.
Higher mortgage rates may be responsible for sales falling. Mortgage News Daily reports that the 30-year average fixed-rate mortgage rate dropped below 3% in June and held there through September. It then began to rise and reached 3% at the end of August.
High home prices are still a problem for buyers. Prices have increased by close to 20% annually. However, August saw a cooling trend with less bidding wars, and slightly higher supply.
Lawrence Yun (NAR chief economist) stated that although contract transactions slow down in September, they are showing signs of a more calmer trend for home prices, with the market running comfortably ahead pre-pandemic activity. It’s important to note that inventory will decrease until the end this year in comparison with the summer months. This happens almost every year.
In the Northeast, pending sales fell by 3.2% over a month and was 18.5% lower than a year ago. The Midwest saw sales drop by 3.5% per month, and 5.8% each year.
South sales decreased by 1.8% in September and fell 5.8% between September 2020 and September 2020. Sales in the West fell by 1.4% and 7.2% compared to a year earlier.