US pending home sales fell to their lowest level in 20 years last month

Washington, DC (CNN) — US pending home sales fell to their lowest level in 20 years in October as mortgage rates surged to their highest levels of the year, according to a report released Thursday.

Pending home sales dropped 1.5% last month from September, monthly data from the National Association of Realtors showed. The pending home sales index — a forward-looking indicator based on contract signings rather than closings — was down 8.5% from a year ago.

Only the Northeast saw monthly gains in pending transactions in October, while the Midwest, South and West all experienced a loss. All four US regions had year-over-year declines in transactions.

“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,” said Lawrence Yun, NAR chief economist.

With such limited inventory, prices are pushed higher. Together with high borrowing costs, many buyers are waiting for greater affordability or have bowed out of the housing market entirely.

“Multiple offers, of course, yield only one winner, with the rest left to continue their search,” said Yun.

But while pending home sales were down year-over-year, new home sales have risen as buyers continued their pivot towards new construction amid a historically low supply of existing homes on the market.

October’s pending home sale numbers suggest that home sales activity is likely to remain steady, at a low level, over the next few months as limited options and significant affordability challenges weigh on buyers, said Hannah Jones, senior economic research analyst at Realtor.com.

This story is developing and will be updated.

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