Pending Home Sales from the National Association for Realtors hit a record low in October, reaching 71.4 – the worst reading in its 22+ year history. Pending home sales typically leads existing home sales for the following month, so this decrease will likely be reflected in November’s Existing Home Sales report.
The existing home sales market has been at somewhat of a standstill lately due to decades-high mortgage rates and highly limited inventory. Pending (and existing) home sales will probably continue to decline unless the Federal Reserve begins to cut rates, and sticky inflation pressures ease. If and when these cuts begin and by how much is anyone’s guess… If rates do drop, a flood of existing homes could hit the market which would compete with new home inventory. This has the potential to cause prices to drop.
If rates remain as they are and Pending Home Sales begin to improve, it may not necessarily be a positive development. This could be a sign of falling prices and a rush to exit the market.
