The National Association of Realtors released a report on Friday showing pending home sales in the U.S. plunged by much more than expected in the month of September.
NAR said its pending home sales index tumbled by 10.2 percent to 79.5 in September after falling by 1.9 percent to a revised 88.5 in August.
Economists had expected pending home sales to slump by 5.0 percent compared to the 2.0 percent drop originally reported for the previous month.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Pending home sales fell for the fourth straight month, resulting in a 31.0 percent nosedive compared to the same month a year ago.
“Persistent inflation has proven quite harmful to the housing market,” said NAR Chief Economist Lawrence Yun. “The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers.”
He added, “Only when inflation is tamed will mortgage rates retreat and boost home purchasing power for buyers.”
NAR said pending home sales declined in all four major regions of the country, with the Northeast leading the way lower with a 16.2 percent plunge.
Pending home sales in the West also dove by 11.7 percent, while pending sales in the Midwest and South tumbled by 8.8 percent and 8.1 percent, respectively.
The Commerce Department released a separate report on Wednesday showing new home sales in the U.S. pulled back sharply in September after unexpectedly skyrocketing in August, although the decrease was smaller than expected.
The report showed new home sales tumbled by 10.9 percent to an annual rate of 603,000 in September after soaring by 24.7 percent to a revised rate of 677,000 in August.
Economists had expected new home sales to plunge by 14.6 percent to a rate of 585,000 from the 685,000 originally reported for the previous month.
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