Pending home sales fell 10% in September, much worse than expected

by | Oct 28, 2022 | Business

A Coldwell Banker “Under Contract” sign stands outside a property in Washington, D.C.Andrew Harrer | Bloomberg | Getty ImagesPending home sales, a measure of signed contracts on existing homes, dropped a much worse-than-expected 10.2% in September from August, according to the National Association of Realtors.Economists had predicted a 4% decline. Sales were down 31% year over year.This marks the lowest level on the pending sales index since June 2010, excluding April 2020, when the Covid pandemic was in its early days.Realtors point squarely to sharply higher mortgage rates, which had sat at record lows for the first two years of the pandemic. The average rate on the popular 30-year fixed mortgage was right around 3% at the start of this year, but then rose swiftly, crossing 6% in June, according to Mortgage News Daily. It pulled back a bit in July and August, but then began rising again, crossing 7% in September, when these contracts were signed.”Persistent inflation has proven quite harmful to the housing market,” said NAR Chief Economist Lawrence Yun. “The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers.”Mortgage demand and new listings are dropping, too, because homeowners are unwilling to give up their record-low interest rates to trade up to a much higher one. For potential buyers, the increase in rates means the monthly payment on a median-priced home, with a 20% down payment, is now close to $1,000 higher than it was in Janua …

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