Pending home sales in October fell to their lowest level since 2001. As mortgage rates edged near multi-decade highs, pending home sales declined 1.5% in October on a month-over-month basis, according to data released Thursday by the National Association of Realtors (NAR). As a result, NAR’s Pending Home Sales Index fell to a reading of 71.4, down from 72.6 in September. 

Regionally, the Northeast posted a monthly gain in transactions, but the Midwest, South and West all posted losses. Year over year, all four regions saw a drop in transactions.

Historically high rates harmed the housing market in October

Annualized existing home sales remained below 4 million in October, the lowest rate since 2010. Meanwhile, new home sales posted a better performance as homebuyers pivoted to new construction amid waning existing home supply. New home sales fell 5.6% in October on a month-over-month basis but remained 17.7% above the previous year’s level. 

In today’s tough housing market, the rental market is cooling off,  giving some relief to homebuyers. The national median rent price fell again in October to $1,729, down from $1,747 in September. It dropped on an annual basis for the sixth consecutive month

NAR chief economist Lawrence Yun is optimistic that declining mortgage rates will help qualify more home buyers in the months ahead, but limited housing inventory will remain the sticking point.

“Multiple offers, of course, yield only one winner, with the rest left to continue their search,” he said in a statement. 

Home sales should perform better in 2024 even if affordability remains a challenge

According to Bright MLS’s forecast, mortgage rates will continue to trend downward in 2024, finishing the year at 6.2%. Existing-home sales and housing inventory will increase next year, and home prices will remain stable, said Lisa Sturtevant, the MLS’s chief economist.