Pending home sales, which are a measure of signed contracts to buy existing homes, fell an unexpected 2.3% in September compared with August, according to the National Association of Realtors.
Analysts were predicting a slight monthly gain. Sales were 8% lower compared with September 2020.
Pending sales are a forward-looking indicator of closed sales in one to two months.
Sales may have dropped due to higher mortgage rates. The average rate on 30-year fixed-rate mortgages fell below 3% in July and stayed there until the first week of September, according to Mortgage News Daily. Then it began rising and crossed over 3%, ending the month at 3.15%.
Buyers are also still contending with very high home prices. Price gains have been close to 20% year over year. There was a sign, however, in August that the market was cooling, with fewer bidding wars and slightly more supply coming up for sale.
“Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market is running comfortably ahead of pre-pandemic activity,” said Lawrence Yun, NAR’s chief economist. “It’s worth noting that there will be less inventory until the end of the year compared to the summer months, which happens nearly every year.”
Regionally, pending sales in the Northeast fell 3.2% month over month and were down 18.5% from a year ago. In the Midwest, sales dropped 3.5% for the month and 5.8% annually.
Sales transactions in the South decreased 1.8% for the month and 5.8% from September 2020. In the West, sales fell 1.4% monthly and 7.2% from a year ago.