After reporting a notable pullback in U.S. pending home sales in the previous month, the National Association of Realtors released a report on Monday showing pending home sales rebounded by much more than expected in the month of October.
NAR said its pending home sales index spiked by 7.5 percent to 125.2 in October after tumbling by 2.4 percent to a revised 116.5 in September.
Economists had expected pending home sales to increase by 1.0 percent compared to the 2.3 percent slump originally reported for the previous month.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
The pending home sales index surged to its highest level since last December but was still down by 1.4 percent compared to the same month a year ago.
“Motivated by fast-rising rents and the anticipated increase in mortgage rates, consumers that are on strong financial footing are signing contracts to purchase a home sooner rather than later,” said Lawrence Yun, NAR’s chief economist.
He added, “This solid buying is a testament to demand still being relatively high, as it is occurring during a time when inventory is still markedly low.”
The report showed pending home sales in the Midwest soared by 11.8 percent, while pending sales in the South and Northeast jumped by 8.0 percent and 6.9 percent, respectively. Pending home sales in the West also rose by 2.1 percent.
“The notable gain in October assures that total existing-home sales in 2021 will exceed 6 million, which will shape up to be the best performance in 15 years,” Yun said.
Yun expects the housing market to remain robust but forecast home prices will rise at a gentler pace over the course of the next several months and expects demand to be milder as mortgage rates increase.
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