Pending home sales fell for the fifth consecutive month in October, with three of the four regions seeing month-over-month declines, according to the National Association of Realtors.
The Pending Home Sales Index dropped by 4.6% between September and October. Year-over-year it tanked by 37%.
All four regions saw pending sales drop year-over-year. The Midwest, however, experienced a small uptick month-over-month, up by 3.3%. The Northeast PHSI fell by 4.3% from September, while the South fell 6.4% and the West saw a major decline of 11.3%.
“October was a difficult month for home buyers as they faced 20-year-high mortgage rates. The West region, in particular, suffered from the combination of high interest rates and expensive home prices. Only the Midwest squeaked out a gain,” said NAR Chief Economist Lawrence Yun.
“The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November.”
Purchase loan applications ticked up recently as some sidelined borrowers rushed to buy when rates began falling. Rates saw their largest single-week decline in 40 years earlier this month, dropping from 7.08% to 6.60%.
As a result, the typical monthly mortgage payment declined by $100, giving a typical homebuyer with a $2,500 budget $12,000 more purchasing power over the course of just one week.
The time between Thanksgiving and the end of the year is typically slow, so predictions for next year may not solidify until January.
Many analysts see light at the end of the tunnel for buyers. Zillow expects the affordability crisis to ease some in 2023.
“Affordability is going to be the biggest factor in housing for 2023, but there’s room for optimism on that front if mortgage rates recede,” said Zillow Chief Economist Skylar Olsen.
Some see a worse turn for the market, however. Wharton Professor Jeremy Siegel is anticipating negative growth in the housing market due to continued Federal rate hikes.
“I expect housing prices to fall 10% to 15%, and the housing prices are accelerating on the downside,” he told CNBC.