The National Association of Realtors (NAR) said that its Pending Home Sales Index (PHSI) is down for the second consecutive month, dropping 1.1 percent after months of steady gains.
“Pending home transactions saw a small drop-off from the prior month, but still easily outperformed last year’s numbers for October,” Lawrence Yun, NAR’s chief economist, said in a statement. “The housing market is still hot, but we may be starting to see rising home prices hurting affordability.”
The PHSI measures signed contracts for existing one-family residences. At 128.9, it is 20.2 percent higher than in October of last year.
Only the southern region of the U.S. saw encouraging expansion, “although each region achieved year-over-year gains in pending home sales transactions,” the announcement stated. Housing inventory is at a historic low, as are mortgage rates, Yun said.
“The combination of these factors – scarce housing and low rates – plus very strong demand has pushed home prices to levels that are making it difficult to save for a down payment, particularly among first-time buyers, who don’t have the luxury of using housing equity from a sale to use as a down payment,” said Yun. “Work-from-home flexibility has also increased the demand for both primary and secondary homes.”
The Realtor.com Housing Market Recovery Index surpassed the January index, with the most noteworthy rebounds happening in Las Vegas, Nevada; San Francisco, Santa Clara and Los Angeles, California; and Seattle, Washington.
NAR represents over 1.4 million members involved in all aspects of the real estate market.
New home sales dropped 3.5 percent compared to August. The median price of new houses sold was $326,800; the average sales price was $405,400. NAR said the residential real estate sector for the U.S. had increased by almost 9 percent in July. The digital real estate market has overall been booming since the start of the pandemic in March.
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