US pending home sales jump 7.5% in October

Signed contracts on existing US homes, also known as pending sales, jumped 7.5% month-on-month in October, according to the National Association of Realtors.

While sales were still 1.4% lower when compared to the same time a year ago, it is worth noting that October 2020 marked a cyclical high for the US housing market.

Sales were strongest in the Midwest and the South, rising 11.8% and 8.0% month-on-month, respectively.

The moves come as the average rate on the standard 30-year fixed mortgage, which was just below 3% in mid-September, climbed to 3.22% by the end of October.

Pantheon Macroeconomics' Ian Shepherdson said: "The consensus always looked timid, given the tendency for pending home sales this year to overshoot relative to mortgage applications, but this is stronger than we hoped to see. The overshoot presumably reflects the rising share of investors and other cash buyers over the past year; this can't last forever, but in the meantime it points to November existing home sales rising about the 6.5m mark, for the first time since January.

"Easier lending standards and rebounding payrolls are boosting demand, but mortgage rates are likely to rise a bit over the next couple months, so we'd be surprised to see mortgage applications returning to the late 2020 peak."