US pending home sales tick higher in September

US pending home sales unexpectedly rose in September, according to the latest figures from the National Association of Realtors.

The NAR's monthly index rose 0.5% to 104.6 from 104.1 in August, beating expectations for a 0.1% drop. However, year-over-year contract signings dropped 1%, marking the ninth straight month of annual decreases.

The NAR's chief economist, Lawrence Yun, said that even though we are still seeing year-over-year declines, the latest monthly increase is a good, stabilising trend. "This shows that buyers are out there on the sidelines, waiting to jump in once more inventory becomes available and the price is right," he said.

"When compared to the year 2000, when the housing market was considered very healthy, and home sales figures were roughly equivalent and the affordability conditions were much lower compared to now. So even though affordability has been falling recently, the demand for housing should remain steady."

Regionally, pending home sales in the Northeast dropped 0.4% to 92.3 in September, while sales in the Midwest rose 1.2% to 102.4. In the South, sales fell 1.4% to 119.6 while sales in the West were up 4.5% to 93.1 last month.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "This increase is welcome, especially because Hurricanes Florence and Michael could have visibly depressed activity. But it’s hardly great, and the overall housing market picture is discouraging.

"The trend in sales has softened in recent months in the wake of the modest decline in mortgage applications, and the September gain in pending sales followed falls totalling 2.7% in July and August. Higher mortgage rates and slightly tighter lending standards are hurting, and we have no expectation that this picture will change anytime soon."