Number: Rapid increase in contract conclusions
The number of homebuyers who signed home purchase contracts in October increased significantly, far exceeding economists’ expectations.
The National Association of Real Estate Agents reported on Monday that pending home sales increased 7.5% in October compared to September. Economists surveyed by MarketWatch predicted a 0.7% increase in pending home sales in October.
Compared to last year, pending sales were down 1.4%. This reflects how much colder home buying activity has been since the rapid pace of 2020.
The Pending Home Sales Index measures real estate transactions that have been contracted for previously owned homes but have not yet been sold and are benchmarked to 2001 contracting activities. This index provides insight into direction. Second-hand home sales will take months to come, based on closed transactions.
Lawrence Yun, chief economist at the National Association of Realtors, said, “Inspired by soaring rents and expected rises in mortgage rates, consumers with a strong financial base will sooner or later sign contracts to buy homes. I have. ” report. “This solid purchase is a testament to the relatively high demand, as it occurs when inventories are still significantly low.”
According to the report, sales increased in all regions, driven by a 11.8% increase in the Midwest. Yun added that the report consolidates the forecast that existing home sales will exceed 6 million annually in 2021.
The October Pending Home Sales Report may help explain some of the content of the October Existing Home Sales Report released last week. Sales of reserved homes declined in September, but sales of existing homes increased in October. Many economists were surprised by the increase in existing home sales in October. This is because the pending home sales report is generally an indicator of existing home sales, as it records when the contract was signed and existing home sales reflect when the transaction was closed.
Sales are still fast-paced, especially in the fall, but most economists expect the momentum to slow next year, especially if mortgage rates rise as expected.
In the short term, the future trajectory of the housing market may depend on what happens with the omicron mutant of the virus that causes COVID-19. It is not yet known how contagious the new variant is and whether it increases the likelihood of more severe cases of COVID-19 that can lead to hospitalization or death. If the variant is shown to be a greater threat, and if it circumvents the protection provided by the vaccine, policies aimed at controlling infection rates may be reintroduced.
The real estate industry is adapting in many ways to provide more flexibility, so it is unlikely that a slowdown similar to what happened at the beginning of the pandemic will occur. However, if the new variant emphasizes consumer confidence, some prospective buyers may infer the decision to buy a home again.
What they are saying
George Ratiu, Economic Research Manager at Realtor.com, said: “The real estate market has left the overheated spring of 2021 as an increase in the number of homeowners ready to move forward with a delayed plan for the pandemic has boosted new listings and curbed price spikes.”
Pending home sales surge in October — will the new COVID-19 Omicron variant outperform the real estate market?
Source link Pending home sales surge in October — will the new COVID-19 Omicron variant outperform the real estate market?