Pending home sales fell for the sixth consecutive month in November, recording a 4.0% month-over-month drop that resulted in an index reading of 73.9, according to data released last Wednesday by the National Association of Realtors.
“Pending home sales recorded the second-lowest monthly reading in 20 years as interest rates, which climbed at one of the fastest paces on record this year, drastically cut into the number of contract signings to buy a home,” Lawrence Yun, NAR’s chief economist, said in a statement. “Falling home sales and construction have hurt broader economic activity.”
Year over year, the Pending Home Sales Index was down 37.8%, marking the 18th consecutive month of annual declines. An index of 100 is equal to the level of contract activity in 2001.
“Pending-home sales in November reflect a freeze in the housing market, as buyers remain on the sideline and sellers are staying put,” Odeta Kushi, First American’s deputy chief economist, said in a statement. “Yet, mortgage applications point to a thawing, but still cold, housing market as mortgage rates come down.”
On a month over month basis, all four of the major U.S. regions recorded declines, with the Northeast recording the largest monthly decline at 7.9%, to a reading of 63.3. After recording the largest monthly drop in October, the West rebounded somewhat. The region recorded the smallest month-over-month decrease at 0.9%, falling to a reading of 55.1. Year over year, all four regions experienced declines, with the West recording the largest drop at 45.7% and the Midwest recording the smallest yearly decline at 31.6%.
“The Midwest region — with relatively affordable home prices — has held up better, while the unaffordable West region suffered the largest decline in activity,” Yun said.
Kushi added: “West coast markets are also where we are seeing the fastest house price deceleration.”