Pending Sales of US Existing Homes Rise by More Than Forecast
Pending sales of previously owned US homes rose in October by more than forecast as buyers took advantage of a decline in mortgage rates.
An index of contract signings increased 1.9% to 76.3, the highest in nearly a year, according to data issued Tuesday by the National Association of Realtors. The median projection in a Bloomberg survey was for a 0.2% gain.
A decline in mortgage rates to a one-year low during the month, along with a pickup in inventory this year, helped encourage potential buyers to step off the sidelines. At the same time, the path forward for the housing market may prove challenging without a further decline in home financing costs as prices stay elevated.
The 30-year fixed rate is currently hovering just under 6.4% after falling in October to a low of 6.3%.
A slight pickup in mortgage applications for purchases suggests sales will gradually improve over the next several months, Charlie Dougherty, senior economist at Wells Fargo & Co., said in a note last week.
“While there is further scope for improvement in the months ahead, we do not anticipate a strong rebound as elevated homeownership costs remain a constraint,” Dougherty said. “What’s more, the bulk of mortgaged homeowners still hold sub-5% mortgage rates, well below where mortgage rates currently prevail.”
The NAR’s report showed contract signings rose in three of four US regions, led by a 5.3% increase in the Midwest. Pending sales climbed 1.4% in the South, the biggest home-selling region, but fell in the West.
Pending-homes sales tend to be a leading indicator for previously owned homes, as houses typically go under contract a month or two before they’re sold.
Source : Bloomberg.com
