Pending U.S. home sales fell by 10.2% in September, marking four consecutive months of decline, according to a monthly report issued Friday by the National Association of Realtors. File Photo by Dan Moyle/Flickr
Oct. 28 (UPI) -- Potential or pending U.S. home sales fell by 10.2% in September, marking four consecutive months of decline, according to a monthly report issued Friday by the National Association of Realtors.
All four major regions recorded month-over-month and year-over-year declines in transactions.
Numbers are based on the Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
Year-over-year, pending transactions slid by 31%.
The decline in pending home sales from August to September is the biggest drop since the immediate aftermath of the onset of the COVID-19 pandemic. Economists had predicted a 4% decline, according to NBC.
The decline comes amid surging mortgage rates as the U.S. Federal Reserve Bank looks to curb rising inflation.
Average mortgage interest rates have surpassed 7%, rising to their highest level in 20 years, the Federal Home Loan Mortgage Corp. said Thursday.
New home listings are also down compared to one year ago, with homeowners unwilling to give up 3% mortgage rates that they locked in to before this year's surge.
"Persistent inflation has proven quite harmful to the housing market," NAR Chief Economist Lawrence Yun said in a statement.
"The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers."
The mortgage rate increase has stagnated the housing market, and "many potential homebuyers are choosing to wait and see where the housing market ends up, pushing demand and home prices further downward," Federal Home Loan Mortgage Corp. head economist Sam Khatar said in a statement.
"The new normal for mortgage rates could be around 7% for a while. On a $300,000 loan, that translates to a typical monthly mortgage payment of nearly $2,000, compared to $1,265 just one year ago -- a difference of more than $700 per month. Only when inflation is tamed will mortgage rates retreat and boost home purchasing power for buyers," Yun said.