From September to October 2023, pending home sales in the nation fell by 1.5%, which is the lowest level ever recorded by the National Association of Realtors (NAR) since they started tracking it in 2001.
This is even lower than the 8.5% drop in October 2022 compared to the same month in 2008 during the financial crisis. The pending home sales number usually reflects the demand for housing, but this year, it is influenced by not only the reduced interest because of high mortgage rates, but also the very low availability of homes for sale.
Lower interest rates will make more home buyers eligible, but they will have to go down more before current homeowners will be willing to sell their homes. Many of these homeowners benefited from the extremely low interest rates during the pandemic, and getting a new loan with the current rates is preventing them from moving.
Limited supply and persistent demand have kept home prices high and seem to be increasing them even more. Homes valued at $750,000+ have gone up the most because there are more homes for sale on the high end of the market. This leads to multiple bids because those who don’t “win” know they will be looking for other choices in a very tight market and may not find another one for a long time.
In Virginia, pending home sales decreased by 5.8% year-over-year, and by 4% from September 2023. Even homes in the right location but requiring a lot of repairs are selling for much more than their listed prices, especially in the Commonwealth's metropolitan areas.
To see the Virginia Realtors Association's October report on home sales, click here.
Sources: National Association of Realtors, CNBC