The trend of US home buyers fleeing expensive coastal regions is still happening, according to the latest contract data. In October, the National Association of Realtors (NAR) Pending Home Sales Index (PHSI) showed a mixed movement. The national index is lower than last year but that’s not the case for half of the regions. Last month, the Northeastern and West regions showed slowing growth. However, the Midwest and South indexes climbed as buyers continued to flock to more affordable areas.
US Pending Home Sales Are Weaker Than Last Year
The PHSI, a leading indicator of contracts signed for home purchases, was mixed. The seasonally adjusted index reached 125.2 in October, up 7.5% from a month before. It was still 1.4% lower than the same month a year earlier. While this is lower than last year, it happens to be the biggest index value for this year.
On an unadjusted basis, the index isn’t quite seeing the same amount of growth. The unadjusted PHSI fell to 119.5 in October, up 13.1% from the month before. It was 4.7% lower compared to the same month last year, though. Unadjusted month-to-month data is volatile and has limited use in analysis. Year-over-year data yields more important insights when discussing growth.
The Midwest and South Have Bucked The Pending Home Sale Trend
The breakdown shows the Midwest and South have become the country’s hot real estate markets. The seasonally adjusted PHSI for the Midwest fell to 124.6 in October, up 5.1% from last year. The South region jumped to a scorching hot 149.7, up 0.6% over the same period. Both of those cities have very high index readings, in case that wasn’t clear.
Northeastern and West Housing Markets Weighed The Index Down
As for the other two regions, they were weighing the index down. The Northeast region fell to 99.5 in October, down 10.0% from last year. Over in the West region, the index fell to 107.5, down 6.2% from last year. Pre-2020, these markets led for home sale activity, but that’s been flipped on its head recently.
The US PHSI doesn’t have a clear takeaway as it did at this time last year. At the national level, things are still strong, though a little weaker than last year. Breaking it down by region, expensive coastal areas that were hot pre-2020 are tepid. Though markets typically ignored are becoming hot, such as the Midwest and South.
