The National Association of Realtors® (NAR) released the latest monthly data for its pending home sales index. The index fell 1.5% in October to 71.4, the index's lowest reading since the NAR began tracking data in 2001, and is down 8.5% compared to one year ago. Pending home sales were expected to fall 2.0% last month.
"During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years," said Lawrence Yun, NAR chief economist. "Recent weeks' successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied. Multiple offers, of course, yield only one winner, with the rest left to continue their search."
"Home sales are rising in places where more inventory is available," Yun added. "Sales for properties priced above $750,000 were higher than a year ago, because there is more inventory at this price point than what we saw last October. Additionally, newly built home sales are up 4.5% year-to-date due to homebuilders' ability to create more inventory.1 It is vital that we continue to focus on boosting housing supply by all means in all corners of the country over the coming months."
Pending Home Sales Background
The pending home sales index (PHSI) was created by the National Association of Relators to track home sales where the contract is signed, but the transaction has not yet closed. An index of 100 is equal to the level of contract activity in 2001. The PHSI is a leading economic indicator of future existing home sales.
The chart below gives us a snapshot of the index since 2001, the first year data was analyzed. 
Over this time frame, the US population has grown by 18.3%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001.
The above chart shows the percent off turn-of-the-century values. The index for the most recent month is currently 44% below its all-time high from August 2020. The population-adjusted index is 51% off its high from April 2005.
