US pending home sales rose 0.1% in October following a revised 1.4% gain the previous month, which was originally reported as a gain of 1.5%. The increase was slightly lower than expected with the annual increase at 1.8%.
Monthly sales increased in the Northeast, Midwest and West, but there was a decline of sales in the South, which dragged the overall index down. Sales in all regions increased on an annual basis.
There were further underlying concerns surrounding weak housing supply, which continued to have a negative impact on sales and there was further evidence of upward pressures on prices as prospective buyers were forced to chase deals. This year, 40% of sales were above list price compared with 33% last year.
On seasonal grounds, overall supply will remain weak over the next few months, maintaining overall supply concerns. The main short-term focus is liable to be on interest rates given the surge in yields since the US Presidential election. There was a fresh increase in 30-year yields today to 3.06% which will put renewed upward pressure on mortgage rates with rates pushing above the 4.00% level which will maintain concerns over a lack of affordability.
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