Pending home sales fell for the fifth consecutive month in October, as high mortgage rates dampened demand, the National Association of Realtors reported on Wednesday.
Three of four U.S. regions recorded month-over-month decreases, but the entire country saw year-over-year drops in transaction activity.
“October was a difficult month for home buyers as they faced 20-year-high mortgage rates,” said NAR Chief Economist Lawrence Yun. “The West region, in particular, suffered from the combination of high interest rates and expensive home prices. Only the Midwest squeaked out a gain.”
The housing sector has been the area of the economy most affected by higher interest rates as the Federal Reserve attempts to corral inflation, now running at a 7.7% annual pace.
“Contract signings for existing homes took yet another step back in October as home purchase activity continued to slow” Realtor.com Economic Data Analyst Hannah Jones said. “The Freddie Mac 30-year fixed rate surpassed the 7% threshold by the end of October, a level not seen in 20 years. Mortgage rates up more than 350 basis points and home prices up 13.3% compared to last year meant many buyers simply could not afford to finance a home purchase in October.”
NAR’s Yun said the recent dip in mortgage rates could bring some prospective homebuyers back into the market.
“The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November,” he said.