Pending home sales flat as affordability challenges persist

"Although some Realtors might be expecting a more active housing market in the current months, economists warn that affordability remains a challenge for many consumers. Lower rates have been bringing some buyers into the market, but according to data from the Mortgage Bankers Association, the recent drop in rates has primarily increased refinance activity rather than purchase activity, Lisa Sturtevant, chief economist for Bright MLS, said in a statement."

"Affordability is still a constraint even as rates have fallen to their lowest level in a year. And consumers are generally feeling more cautious amidst growing economic uncertainty. Sam Williamson, First American's senior economist, added that he expects much of the year's sales activity will be driven by life happens moments, especially as affordability challenges and structural inventory shortages continue to weigh on demand. Lower rates help, but they're not a cure-all, Williamson said in a statement."

"Regionally, pending home sales rose month over month in the Northeast (65.7) and South (90.0), which recorded 3.1% and 1.1% increases, respectively. In contrast, pending home sales fell on a monthly basis in the Midwest (down 3.4% to a reading of 73.8) and the West (down 0.2% to 59.2). Annually, pending home sales rose in the Northeast (0.5%) and South (0.9%) but fell in the Midwest (-1.5%) and West (-5.3%)."

Pending home sales were flat month over month and declined 0.9% year over year in September. Roughly 20% of Realtors expect an uptick in buyer or seller traffic over the next three months. Affordability remains a significant challenge for many consumers despite recent mortgage rate declines. Lower rates have increased refinance activity more than purchase activity, according to Mortgage Bankers Association data. Sales activity this year is expected to be driven largely by life events amid structural inventory shortages. Regionally, the Northeast and South saw month-over-month gains, while the Midwest and West experienced declines. The South posted both month-over-month and year-over-year gains due to relative affordability.

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