Pending home sales experienced a minor decline in September after four consecutive months of contract activity growth, according to the National Association of Realtors. While all four major U.S. regions recorded notable year-over-year increases, only the Northeast achieved month-over-month gains in pending home sales transactions.
The Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, fell 2.2% to 130.0 in September 2020. Year-over-year, contract signings rose 20.5%. An index of 100 is equal to the level of contract activity in 2001.
"The demand for home buying remains super strong, even with a slight monthly pullback in September, and we're still likely to end the year with more homes sold overall in 2020 than in 2019," said Lawrence Yun, NAR's chief economist. "With persistent low mortgage rates and some degree of a continuing jobs recovery, more contract signings are expected in the near future."
"Additionally, a second-order demand will steadily arise as homeowners who had not considered moving before the pandemic begin to enter the market," Yun said. "A number of these owners are contemplating moving into larger homes in less densely populated areas in light of new-found work-from-home flexibility."
Realtor.com's Housing Market Recovery Index, which reveals metro areas where the market has recovered or even exceeded its previous January levels, showed the greatest recoveries as of October 10th were in Seattle-Tacoma-Bellevue, Wash.; Boston-Cambridge-Newton, Mass.-N.H.; Los Angeles-Long Beach-Anaheim, Calif.; Las Vegas-Henderson-Paradise, Nev.; and San Jose-Sunnyvale-Santa Clara, Calif.
September Pending Home Sales Regional Breakdown
Three of four regional indices recorded decreases in contract activity on a month-over-month basis in September.
The Northeast PHSI grew 2.0% to 119.4 in September, a 27.7% increase from a year ago. In the Midwest, the index slid 3.2% to 120.5 last month, up 18.5% from September 2019.
Pending home sales in the South decreased 3.0% to an index of 150.1 in September, up 19.6% from September 2019. The index in the West fell 2.6% in September to 116.8, up 19.3% from a year ago.