Contract signatures rose 7.5% in October and home sales for 2021 are set to hit a 15-year high, the National Association of Realtors® has reported. on Monday. Pending home sales rebounded after falling in September.
Despite rising mortgage rates, homebuyers don't seem to be deterred by rising financing costs and home prices. Contract activity increased month-over-month in the four key regions of the US NAR Pending Home Sales Index.
“Driven by a rapid increase in rents and an anticipated rise in mortgage rates, financially sound consumers will be signing up to buy a home as soon as possible,” said Lawrence Yun, NAR chief economist, said. "This strong buying is a testament to the fact that demand is still relatively high, as it comes at a time when stocks are still very low."
Yun notes that October's increase ensures that total existing-home sales in 2021 will exceed 6 million. This will mark the best home sales performance in 15 years, Yun said.
However, he predicts that home prices will increase at a "softer pace" over the next few months and expects demand to fall further as mortgage rates rise. Freddie Mac reported that a 30-year fixed-rate mortgage was 3.10% last week, up from the 2.72% average a year ago.
Last month, contract signatures increased at the fastest rate in the Midwest and Southern regions. Northeast grew 6.9% in October, but contract signings were still down 10% from a year ago. Midwest saw contract signatures increase by 11.8% in October; Pending home sales rose 5.1% from a year ago.
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