Pending home sales fell 0.6% month-over-month in October. This was worse than expectations for a 1% rise.
Meanwhile, pending home sales were down 2.2% on the year, worse than expectations for a 1.1% fall.
Last month’s number was revised up to show a 4.6% fall, compared to an initial reading of a 5.6% monthly fall.
Year-over-year the index was revised up to show a 2% rise, compared with an initial reading of a 1.1% rise.
“The government shutdown in the first half of last month sidelined some potential buyers,” Lawrence Yun, NAR chief economist said in a press release. “In a survey, 17 per cent of Realtors reported delays in October, mostly from waiting for IRS income verification for mortgage approval.”
Limited inventory and declining affordability can continue to weigh on the index. Yun thinks the housing recovery is still at a healthy pace and attributes the decline in pending home sales to a cooling down of run up we had seen in housing recently.
Here’s a look at the regional breakdown:
- In the Northeast, the pending home sales index (PHSI) up 2.8% on the month, and is up 8.1% from a year ago.
- In the Midwest, the index is up 1.2% on the month and up 3.2% from a year ago.
- In the South, the index fell 0.8% on the month, and is down 1.5% from a year ago.
- In the West, it is down 4.1% on the month and 12.1% from a year ago.
Pending home sales have been falling for some time now and the index is considered to be a leading indicator for future existing home sales. The Commerce Department expects that 80% of signings will become existing home sales transactions within two months.
The PHSI looks at all homes where a contract has been signed but the sale is not complete.
Here’s a look at the trajectory of pending home sales: