Pending home sales in the U.S. slumped to their lowest level in over twenty years in the month of October, the National Association of Realtors revealed in a report released on Thursday.
NAR said its pending home sales index tumbled by 1.5 percent to 71.4 in October after jumping by 1.0 percent to a revised 72.5 in September.
Economists had expected pending home sales to plunge by 2.0 percent compared to the 1.1 percent surge originally reported for the previous month.
With the decrease, the pending home sales index fell to its lowest level since the index was originated in 2001.
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.
“During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years,” said Lawrence Yun, NAR chief economist.
“Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied,” he added. “Multiple offers, of course, yield only one winner, with the rest left to continue their search.”
Pending home sales in the West led the way lower, plummeting by 6.0 percent, while pending home sales in the South slumped by 1.9 percent and pending home sales in the Midwest dipped by 0.4 percent.
Meanwhile, the report said pending home sales in the Northeast jumped by 2.7 percent.
The Commerce Department released a separate report on Monday showing new home sales in U.S. pulled back sharply in the month of October after soaring in September.
The report said new home sales plunged by 5.6 percent to an annual rate of 679,000 in October after spiking by 8.6 percent to a downwardly revised rate of 719,000 in September.
Economists had expected new home sales to tumble by 4.5 percent to a rate of 725,000 from the 759,000 originally reported for the previous month.
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