Pending sales of homes in the U.S. fell 1.5% in October to the lowest level since the data started being tracked by the National Association of Realtors in 2001.
The drop coincides with the period when mortgage rates rose to near 8%, the highest level in more than two decades.
The index that follows the number of contracts signed before the closing of a home sale fell to 71.4 in October from 77.3 in September, the NAR said in a statement. The index dropped 8.5% from a year earlier.
"During October, mortgage rates were at their highest, and contract signings for existing homes were at their lowest in more than 20 years," NAR Chief Economist Lawrence 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."
Mortgage rates are now at their lowest level in 10 weeks, responding to lower Treasury yields as inflation expectations soften.
The average 30-year fixed rate dropped to 7.37% in the week ended Nov. 24, the Mortgage Bankers Association said Wednesday. Demand for mortgages rose 0.3%.
NAR's pending home sale index is a leading indicator of upcoming sales closings. Of the four U.S. regions in the survey, only the Northeast had a positive reading on a monthly basis in October.
"Home sales are rising in places where more inventory is available," Yun said. "Sales for properties priced above $750,000 were higher than a year ago, because there is more inventory at this price point than what we saw last October."
