US Pending Home Sales Climb, but Number of Buyers Backing Out of Deals Grows

Redfin reported on Friday (11-17-23) that US pending home sales rose 1% month-over-month in October to their highest level in a year on a seasonally adjusted basis. Year-over-year, pending homes sales declined 4.8%, but that is the smallest annual decline in almost two years.

Redfin offers the following reasons for the resurgence in pending homes sales:

• The supply crunch has eased slightly, which is giving buyers more options to choose from.
• Sellers are offering buyers more concessions and cutting prices.
• Some buyers have to move. You can only wait so long before the time for the necessary move is at hand.
• Mortgage rates have trended modestly lower over the past several weeks.

On the other hand, Redfin points out that while pending home sales have inched higher in recent months, closed home sales continue to decline. In October, closed sales fell 1.8% month-over-month and were down 12.5% year-over-year, hitting the lowest level since the onset of the pandemic on a seasonally adjusted basis.

That’s partly because many deals are falling through at the last minute, Redfin says. Roughly 54,000 home-purchase agreements were canceled in October, equal to 17.2% of homes that went under contract that month—the highest percentage in Redfin records that date back to 2017. That’s up from 16.1% one month earlier and 16.6% one year earlier.