Dive Brief:
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Pending home sales, which reflect the number of U.S. homes under contract, was largely unchanged from September to October, rising 0.1% to a mark of 110 from a downward-revised September figure of 109.9, according to the National Association of Realtors’ Pending Home Sales Index released Wednesday.
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All regions tracked were ahead of the year-ago period in October. The Northeast and Midwest posted year-over-year pending sales gains of 3.9% to 96.9 and 1.2% to 106.3 in October. The South was 0.8% ahead of last October at a mark of 129.1 while the West was up 2.5% for the period at 108.3.
- Overall, the index was 1.8% higher in October than it was a year ago.
Dive Insight:
More consistent job creation nationwide helped balance the supply-side headwinds of limited inventory and rising prices during the month, NAR Chief Economist Lawrence Yun said in a statement. However, those factors are expected to magnify the typical seasonal drop-off in new-home listings. Four in 10 October sales were at or above list price compared to one-third a year ago.
An increase in mortgage rates from historically low levels in the aftermath of the election also threatens to reduce the number of buyers on the market going forward. "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," Yun said. "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."
More new construction will be required to alleviate the existing affordability pressures. Housing starts hit a nine-year high in October on a positive swing in the volatile multifamily category. Nonetheless, single-family construction continued its slow recovery, increasing 10.7% from September.
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