Despite Low Mortgage Rates, Fewer Homes Under Contract
Despite low mortgage rates, home sales are slowing nationwide.
A Look Into Housing’s Future
According to the National Association of REALTORS®, the number of homes under contract fell 1 percent in August on a seasonally-adjusted basis.
The numbers are a part of the monthly Pending Home Sales Index, a report that measures homes under contract — but not yet sold — nationwide.
Because it “looks ahead”, the Pending Home Sales Index is unique among housing market data sets. Unlike most reports that describe the past, the Pending Home Sales Index is forward-looking; a predictor of future housing sales.
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South Region Sails, Northeast Region Flails
The Pending Home Sales Index showed a overall retracement in August, but on a region-by-region basis, results varied.
Broken down by region :
- Northeast Region: -5.8%
- Midwest Region : -3.7%
- South Region : +2.6%
- West Region : -2.4%
This data suggests that closed home sales will be lower in the Northeast and Midwest parts of the county through September and October. This is because the National Association of REALTORS® reports that 80% of homes under contract close within 60 days.
The majority of the remaning homes close in Months 3 and 4, contracts cancellations notwithstanding.
That said, the value of regional data should be questioned.
Like all things real estate, pending home sales are local. For example, in the Northeast Region, where pending home sales slipped in August, there are close to a dozen states. Some of those states performed better than others, and there are some that gained in August — not fell.
The same is true for the South region. Undoubtedly, there are cities that failed to meet the regional average.
For better local market data, talk to a REALTOR®.
Get Local Mortgage Rates
Like real estate, mortgage rates are local, too. Rates vary by state based on default risks and local law. The variance can add to your costs, or your rate. It’s one reason why national rate surveys fall short — they don’t account for local pricing.
Rates Below 4.000 Percent? No, Not Really, But Payments Have Plunged.
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