The National Association of Realtors (NAR) Wednesday morning released its data on pending sales of existing homes for the month of October. The pending home sales index rose 3.5% from a downwardly revised September reading of 105.6 to 109.3. The index is now at its highest reading since June but remains 0.6% below last year’s October reading.
October sales rose in three of four NAR geographical regions.
The consensus estimate called for a month-over-month increase of 1% in pending sales. The index reflects signed contracts, not sales closings. An index reading of 100 equals the average level of contract signings during 2001.
The index has been above 100 (the “average” reading) for 37 straight months.
The NAR’s chief economist, Lawrence Yun, noted:
Last month’s solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months. Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.
Existing inventory has decreased every month on an annual basis for 29 consecutive months, and the number of homes for sale at the end of October was the lowest for the month since 1999. Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand.
By region, October pending home sales increased by 0.5% to an index score of 95 in the Northeast, still down 1.9% compared with October 2016. In the South, sales jumped 7.4% to an index score of 123.6, up 2% compared to last year’s index.
Sales dipped by 0.7% in the West to an index score of 101.6 and remain down 4.4% year over year for the month. Midwest sales increased by 2.8% to 105.8 in October and are now 0.9% below the year-ago total.
The NAR’s Yun forecasts existing home sales to end the year at around 5.52 million, an increase of 1.3% from 2016’s total of 5.45 million. The national median existing home price this year is expected to rise by about 6%. In 2016, existing sales increased 3.8% and prices rose 5.1%.