The pending home sales index fell by 2.3% to 116.7 in September after a strong gain of 8% in August, a sign of a modest pullback in home buying as some purchases are delayed until next year, according to a report from the National Association of Realtors on Thursday.
But the market remains strong, and robust sales will continue for some time. Pending home sales have steadily gained since the recent low of 106.2 in April as the market remains above the pre-pandemic level.
About 80% of pending home sales will become existing home sales within two months. As a result, sales of existing homes will decline slightly in the coming months.
Because of a seasonal effect, the report said that “there will be less inventory until the end of the year compared to the summer months.” We should expect a moderation in sales until the end of the year.
Slower sales also imply less pressure on housing prices as demand eases in the final quarter. Potential buyers are pausing their home search until next year, according to the report.
Pending home sales declined in all four regions, with the Northeast recording the largest yearly drop.
Recent data suggests that the housing market is unlikely to go back to the peak reached late last year. But we expect sales to stay above the pre-pandemic level as demand remains strong well into next year.