Pending home sales dipped in September, the National Association of Realtors reported Thursday, as inventory has tightened in a real estate market that has been stoked red-hot by the pandemic.
Contracts on home purchases dipped 2.2% last month but are over 20% higher than they were a year ago.
Lawrence Yun, chief economist at the National Association of Realtors, attributed the drop in new contracts to a lack of inventory and not less demand.
“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,” he said.
Yun also noted that buyers are looking for homes in less-populated areas because of the coronavirus.
“A number of these owners are contemplating moving into larger homes in less densely populated areas in light of new-found work-from-home flexibility,” he said.
The pandemic has prompted Americans to opt for detached homes over living in crowded urban areas.
Glenn Kelman, Redfin’s CEO, recently said that homebuying has shifted to rural areas and away from densely populated urban areas. “Rural demand is much stronger right now than urban demand, and that’s a flip from where it’s been for the longest time, where everybody wanted to live in the city,” he told CNBC.
Chip Murphy, regional vice president of New York-based Hunt Real Estate, said buyers are looking for yards to provide space for a host of activities since backyards are the safest place to be outside.
“Buyers are looking for activities to keep them busy at home, which has resulted in the popularity of outdoor at-home hobbies like gardening and landscaping, bird-watching, and outdoor home improvements,” he said.
Joseph Zoppi, managing partner of Templar Real Estate in Princeton, New Jersey, said that people migrating to rural areas is happening nationwide in a big way.
Activity in pending home sales is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads existing-home sales by a month or two.
September’s monthly decline marked the end to increases in contract activity from the four prior months.
The drop in pending home sales comes after the NAR reported last week that sales of existing U.S. homes soared 9.4% in September and were up nearly 21% from one year ago.
