U.S. pending-home sales rose 1% month over month in October to a seasonally adjusted annual rate of 401,000, the highest level in a year. Although pending sales fell 4.8% compared to October 2022, it’s still the smallest annual decline in nearly two years, according to a report from Redfin.
Here’s a look at why pending-home sales picked up:
- The number of existing homes listed increased in October, giving buyers more options to choose from. Active listings, or the total number of homes for sale, rose to 1,412,404, a 1.4% month-over-month increase.
- Sellers cut prices or offered concessions to get to the closing table. According to Redfin, roughly 1 in 5 (20.8%) homes that sold in October posted a price drop, up from 18.4% in September and down from 21.7% in October 2022. Meanwhile, about one-third of sellers offered concessions, such as money for repairs, closing costs and/or mortgage-rate buydowns.
- Major life events, such as mariage, divorce or new jobs brought some buyers back to the market. Some buyers were also eager to relocate to a more affordable place.
- Since late October, mortgage rates have fallen slightly, spurring an uptick in buyer demand. Mortgage applications rose once rates dropped. Since rates have fallen lower in November, pending sales may post a bigger increase this month.
Pending-home sales rose the most in North Port, Florida, increasing 16.4% year over year. Dallas (10.9%) and Tampa, Florida (8.8%) rounded out the top markets that saw higher pending sales.
However, several markets in the South posted double-digit declines in pending sales, including Greensboro, North Carolina (-30.6%), Birmingham, Alabama (-24.3%) and Knoxville, Tennessee (-24.2%).
Buyers backed out of deals
While pending sales are on the upswing, the number of closed home sales continues trending down, indicating that homebuyers are canceling deals at the last minute.
In October, closed sales reached an annual rate of 398,537 on a seasonally adjusted basis, down 1.8% from September and 12.5% from a year earlier. That’s the lowest level since the start of the COVID-19 pandemic.
Roughly 54,000 U.S. home-purchase agreements fell through in October, or 17.2% of homes that were under contract, the highest rate on record. That’s up from 16.1% in September and 16.6% over the previous year.
Home prices continued rising year over year
The median U.S. home sale price surged 3.5% year over year to $413,874 in October, up slightly (0.5%) from the month prior. The limited number of existing homes on the market is buoying elevated home prices.
Lake County, Illinois (16.4%), Newark, New Jersey (15.2%) and Camden, New Jersey (13.8%) posted the biggest median sales-price growth compared to a year ago. Median prices fell the most in North Port (-8.2%), Austin, Texas (-6.5%) and Honolulu, Hawaii (-4.3%).
