The index, based on contract signings, rose 3.5 percent to 109.3 in October from 105.6 in September, making October the highest reading since June 2017.
However, the index is still slightly below last year’s data by 0.6 percent. NAR’s Chief Economist Lawrence Yun attributes this to the supply and affordability challenges the market experienced most of the year.
“Although homebuilders are doing their best to ramp up production of single-family homes amidst ongoing labor and cost challenges, overall activity still drastically lags demand,” Yun said.
Annually, existing inventory has decreased every month for 29 months straight, and the number of homes for sale at the end of October was the lowest for the month since 1991.
“Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand,” Yun said.
In October, pending sales were driven higher by the South, which experienced a rebound despite hurricane-related disruptions in September. Although, the bounce back wasn't enough to impact the year-over-year decrease.
“Last month's solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months,” Yun said. “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.”
Regionally, the PHSI in the South increased 7.4 percent to an index of 123.6 in October and is currently 2 percent higher than this time last year. In addition, the index in the West declined by 0.7 percent in October to 101.6 and is now 4.4 percent below 2016.
Pending home sales in Northeast rose slightly by 0.5 percent to 95.0 in October but is 1.9 percent below a year ago. In the Midwest, the index increased 2.8 percent to 105.8 in October but remains 0.9 percent lower than last year.
As 2017 comes to a close, NAR forecasts existing-home sales to finish at about 5.52 million—representing an increase of 1.3 percent from 2016 to 5.45 million. Meanwhile, the national median existing-home price for 2017 is predicted to increase by about 6 percent.
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