US pending existing home sales inched back up in October as the National Association of Realtors predicted transactions will reach their highest point since 2006 by the year’s end.
The National Association of Realtors Pending Home Sales Index was 107.7 last month, an uptick of 0.2 percent from September’s upwardly revised level.
October’s index was up 3.9 percent from what it was the same time last year, marking the 14th straight month the index showed year-over-year gains. The increase follows declines in August and September.
An index of 100 represents the average level of pending sales activity for existing homes in 2001, the first year covered by the index.
The index, typically based on about 20 percent of transactions, hints at future activity levels. That’s because it follows cases in which a contract has been signed, but the deal has yet to close.
“Contract signings in October made the most strides in the Northeast, which hasn’t seen much of the drastic price appreciation and supply constraints that are occurring in other parts of the country,” said Lawrence Yun, NAR’s chief economist, in a statement.
In October in the American Northeast, the index was 93.6, a 4.5 percent increase over September. The index in the West climbed by a more-modest 1.7 percent to 106.2.
These performances were countered by declines in the Midwest and South. The Midwest’s October index was 103.9, a 1 percent decrease from September, while in the south the index was 118.1, which is 1.7 percent lower than it was the month before.
“In the most competitive metro areas – particularly those in the South and West – affordability concerns remain heightened as low inventory continues to drive up prices,” explained Yun in the statement.
Yun is calling for existing-home sales to hit a pace of 5.3 million by the end of 2015. If that happens, it would be the highest level of activity since 2006.
NAR is expecting continued sales increases for 2016, but rising prices and will likely put downward pressure on activity.
“Unless sizeable supply gains occur for new and existing homes, prices and rents will continue to exceed wages into next year and hamstring a large pool of potential buyers trying to buy a home,” said Yun.