The National Association of Realtors said Thursday that the Pending Home Sales Index, an indicator of home sales based on contract signings, dropped 1.5% to 71.4 in October. The index is at its lowest level since it was developed in 2001, the NAR said.
The index showed a year-over-year decline of 8.5% in transactions.
The data shows that home sales are below what they were during the recession of 2008-09.
High mortgage rates and low inventory are part of the reason for the housing market's struggles, said Lawrence Yun, NAR chief economist.
"During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years," Yun said. "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."
SEE MORE: Americans experiencing the least affordable housing market since 1984
According to Freddie Mac, mortgage rates fell for a fifth straight week, as of Thursday. An average 30-year fixed-rate mortgage stood at 7.22%. The average fixed-rate mortgage percentage has more than doubled in the last two years, going from around 3% for much of 2021 to holding above 7% every week since August.
Average fixed-rate mortgages topped 7% for the first time since 2002 in August, according to Freddie Mac data.
The Federal Reserve has increased the effective federal funds rate 11 times since March 2022 to try to combat inflation. The federal interest rate is now at its highest level in 22 years.
The Northeastern, Southern and Western U.S. all had significant declines in housing transactions over the last year, while the Midwest largely held steady, the National Association of Realtors said.
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