A measure of housing contract activity rose 7.4% in September as buyers took advantage of lower mortgage rates and higher inventory.
The pending home sales index, which tracks contract signings for existing homes, rose to 75.8 from a month earlier and recorded the highest reading since March, according to the National Association of Realtors. A reading of 100 equals the level of contract activity in 2001.
Compared to a year ago, pending contracts increased by 2.6%.
Housing contract activity increased in all US regions, led by the Westwhich jumped 9.8% from a month ago and 12.3% compared to September 2023. The Midwest reported a 7.1% month-over-month increase.
“Contract signings increased in all regions of the country as buyers took advantage of the combination of lower late summer mortgage rates and more inventory choices,” NAR Chief Economist Lawrence Yun said in a statement. “Further gains are expected if the economy continues to add jobs, inventory levels increase and mortgage rates remain stable.”
But mortgage rates have been rising in recent weeks, giving buyers and sellers extra pause just as the housing market enters its seasonal slowdown. The average interest rate on a 30-year mortgage was 6.54% last week, according to Freddie Mac data, up from 6.08% at the end of September. In recent days, rates have risen north of 7%, according to Mortgage News Daily.
Read more: Mortgage rates are still rising – is this a good time to buy a home?
Home sales are on track for another slow year as prices hover near record highs and buyers and sellers adjust to higher mortgage rates. Existing home sales in September fell 1% to an annual rate of 3.84 million, according to NAR data released last week.
Yun expects sales to rise next year to about 4.47 million and surpass 5 million in 2026. Home price growth may slow to catch up with inflation as more supply hits the market.
Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages and home insurance.
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