Contracts to buy U.S. previously owned homes jumped in October, reversing a decline in the prior month, likely as buyers raced to snap up properties as mortgage rates edged upward.
The National Association of Realtors (NAR) said on Monday that its Pending Home Sales Index, based on signed contracts, rose 7.5% last month to 125.2. Pending home sales increased in all four regions.
Economists poll had forecast contracts, which become sales after a month or two, would rise 0.9% in October. Pending home sales declined 1.4% in October on a year-on-year basis. Limited inventory has led to double-digit growth in home prices.
“Motivated by fast-rising rents and the anticipated increase in mortgage rates, consumers that are on strong financial footing are signing contracts to purchase a home sooner rather than later,” said Lawrence Yun, NAR’s chief economist.
Demand for housing shot up early in the coronavirus pandemic as Americans decamped from city centers to suburbs and other, less densely populated areas in a hunt for larger homes to accommodate online schooling and working from home.
The buying spree has cooled somewhat as workers return to offices, and schools reopened for in-person learning, thanks to COVID-19 vaccinations.
But total existing home sales for 2021 are now set to top six million, which would be the most in 15 years, NAR also reported.