Pending Homes Sales Slip in September

The National Association of Realtors® (NAR) reported on Thursday (10-28-21) that their Pending Homes Sales Index (PHSI) — which is based on signed real estate contracts, not actual closings, for existing single-family homes, condominiums, and co-ops — declined -2.3% month-over-month in September 2021 to a reading of 116.7. An index of 100 is equal to the level of contract activity in 2001. Year-over-year contract signings have also declined -8.0%.

Each of the four major U.S. regions saw contract activity decline month-over-month and year-over-year, with the Northeast experiencing the largest yearly drop.

In a statement prepared to accompany the release of this month’s PHSI, Lawrence Yun, NAR’s chief economist said, “Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market is running comfortably ahead of pre-pandemic activity. It’s worth noting that there will be less inventory until the end of the year compared to the summer months, which happens nearly every year. Some potential buyers have momentarily paused their home search with intentions to resume in 2022.”

Although housing supply remains low, Yun says he expects inventory to turn the corner in 2022. “Rents have been mounting solidly of late, with falling rental vacancy rates. This could lead to more renters seeking homeownership in order to avoid the rising inflation, so an increase in inventory will be welcomed.”