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US pending home sales fell to their lowest level in 20 years last month

US pending home sales fell to their lowest level in 20 years in October as mortgage rates surged to their highest levels of the year, according to a report released Thursday.

Pending home sales dropped 1.5% last month from September, monthly data from the National Association of Realtors showed. The pending home sales index — a forward-looking indicator based on contract signings rather than closings — was down 8.5% from a year ago.

Only the Northeast saw monthly gains in pending transactions in October, while the Midwest, South and West all experienced a loss. All four US regions had year-over-year declines in transactions.

TropicalDingdong ,

Useless without also stating the number of homes for sale and length of time they are listed.

The lede is deeply buried.

It’s an inventory issue, not a demand issue. Sure mortgage rates are high, but plenty who can afford at those rates. Still multiple offers per home, just not enough homes to bid on…

This will be an issue for a very long time, as no one with a sub 5% mortgage should really be considering selling based on only the inflation of the previous two years.

It’s unlikely these mortgage holders will be willing to sell anytime in the next 8 years, so with out an increase in stock, don’t expect prices to drop.

The neighborhoods I look at flatlined at the top and haven’t seen prices come down.

WhiteOakBayou ,

This holds true for my neighborhood as well. Sold my last house at the top and then bought this one near the top before interest rates went crazy. Tax assessor says my home is worth 20%more year over year but prices on the limited inventory I see are just above what they were two years ago.

Rent has gone up quite a bit it seems but there are so few rentals that come open its hard for me to say definitively how much higher on average.

AFKBRBChocolate ,

Came here to say the same thing - sales down but prices up because it’s a lack of inventory. Kind of amazing when you consider interest rates around 8 percent.

dogslayeggs ,

I think that’s true in most places. But in the places I’m looking there is a TON for sale but at prices I can’t afford with the current interest rates. Granted, I’m looking in places that are typically vacation home areas and not in a normal city, so people can unload their second or third or fourth home without caring about the interest rates. They can also unload a couple properties to free up pure cash to buy a new home without caring about the interest rates.

TropicalDingdong ,

What markets are you looking at?

dogslayeggs ,

We’re looking at wine country in both CA and OR. Both places have strict zoning regulations about how open land can be used, so a lot of land can’t be used for residential purposes at all. Even if you use it for farming or cattle, you still can’t put a house on a lot of it. That limits where anyone can live, both locals who need to live there and vacationers who want a second home. We want to be ethical in how we buy a future retirement home and not take up a home that could be used by a local just to sit empty half the time until we retire, so we aren’t just buying a house in town. We’re looking to buy land that we can lease as farm land until we can apply for zoning changes while also staying in an Airstream there when we visit.

Before the interest rates went up, there was so little inventory in those areas we just stopped looking. Now there are a ton of for sale homes and properties. I’m guessing the homes for sale are mostly vacation homes that are being liquidated for cash. Inside the towns where more traditional homes on small lots are built, the prices are decent and availability is great. But these are smaller towns far outside of cities.

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