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Falling Pending Home Sales Indicate Surge Has Stalled

Pending home sales slid in September, and some analysts say the housing boom may have stalled.
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Pending home sales slid 2.2% last month, to an index reading of 130 from September’s record 132.9, according to the National Association of Realtors, and some analysts say that indicates the housing boom may have stalled.

That reading was the first dip in five months, and it trailed the Bloomberg economist survey median of 2.9%. 

Home prices have exploded in recent months, denting demand.

“The pending home sales numbers can be noisy, but this is not noise,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a commentary obtained by

“The data are driven by shifts in mortgage applications, which peaked in August and then dipped in both September and October. So, after four straight big gains, which lifted pending sales to a record high -- slightly above their previous peak, in mid-2005 -- the numbers have now stalled.”

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Attribute that to “a combination of tighter mortgage lending standards, the exhausting of pent-up demand, and soaring covid cases,” he said.

There’s a “leveling in demand, which we expect to persist for the next few months, at least,” Shepherdson said.

“We aren’t worried about a serious weakening of the housing market, but the surge in sales over the summer is over, for now at least.”

As for the NAR’s view, “the demand for home buying remains super strong, even with a slight monthly pullback in September, and we’re still likely to end the year with more homes sold overall in 2020 than in 2019,” Chief Economist Lawrence Yun said in a statement.

“With persistent low mortgage rates and some degree of a continuing jobs recovery, more contract signings are expected in the near future.”