In fact, higher rates are to blame because they are dissuading many homeowners from listing their properties for sale, exacerbating long-term inventory issues. (Justin Sullivan/Getty Images) (Justin Sullivan via Getty Images)Īnother major headwind remains the limited inventory on the market. The other three regions also registered year-over-year declines in activity.Ī sale pending sign is posted in front of a home for sale on May 22, 2013, in San Anselmo, Calif. Only the Northeast saw a 2.7% gain in activity with sales under contract, but that was still down 6.5% from a year ago. The South also recorded a monthly dip of 1.9% in pending sales in October. That meant only 37% of homes sold during the third quarter were affordable to families earning a typical income, down from 40.5% in the second quarter, per the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index.Ĭontract signings in the West fell 6.0%, while pending sales dropped 0.4% in the Midwest. The yield on the 10-year Treasury - which fixed mortgage rates tend to follow - momentarily eclipsed 5% at the end of October for the first time in 16 years as concerns piled on over the Fed’s stance that interest rates will remain "higher for longer." The average rate on the 30-year fixed mortgage surged a half-point during the month, jumping from 7.49% in the first week to 7.79% in the last one, according to Freddie Mac. “We'll see pending home sales falling accordingly in October.” They were the highest in 23 years, which pushed affordability to a record low,” RSM US real estate senior analyst Crystal Sunbury told Yahoo Finance ahead of the release. “Rates were hovering around 8% in October. The drop in the index, a leading gauge used to assess the housing market’s health, still reflects how rising rates in October again unnerved budget-sensitive buyers and pushed pending sales in the resale market down by 8.5% annually.
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