The good news is, US pending home sales fell less than expected in October.

The 1.5% MoM decline on the NAR’s gauge was shallower than the 2% drop consensus expected. The range of estimates from two-dozen economists was -4.4% to 1%.

The bad (or amusing, depending on how you want to look at it) news is, at 71.4, the index now sits at the lowest level in more than two decades of data.

The YoY decline in pending transactions was 8.5%. Obviously, the acute dearth of resale inventory was a factor. Only the Northeast showed a MoM gain.

Mortgage rates approached an eight-handle in October, complicating an already onerous affordability calculus as buyers contemplated the daunting prospect of record-high prices and the highest financing costs in nearly a quarter century.

Not that anyone needs an explainer, but pending home sales are a leading indicator for existing home sales, which remain mired in a historic slump having fallen in 19 of the last 21 months.

Prices are supported by an ongoing supply-demand mismatch. Although new home prices plunged the most ever in October, the bigger picture is one of deteriorating affordability to the extreme detriment of housing security in the US.

Earlier this week, I casually noted that “every four-bedroom in the suburbs isn’t worth $1.2 million.” In a testament to how pervasive that dynamic really is, the government has now extended Fannie and Freddie backing for $1 million homes to more areas and increased the baseline conforming loan limit value to $766,550, up more than $40,000 for 2024 from this year.

Redfin this week unveiled their own home price index which is similar to the Case-Shiller gauges but more current. That’s helpful. The Case-Shiller updates come on a two-month delay.

The Redfin index showed nationwide prices rose 0.7% MoM in October to a(nother) record high. “Monthly price growth is now on par with pre-pandemic levels following a roller coaster ride that sent price growth soaring and then tumbling,” Lily Katz wrote, adding that YoY price growth exceeded 6% last month.

On the bright side, mortgage payments are now falling thanks to the decline in rates which accompanied this month’s historic bond rally. According to Redfin’s data, the typical monthly mortgage payment for the four weeks ending November 26 was $2,575, down a whole $164 from last month’s record. That modest relief amounts to one grocery trip for a family of four.

“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 Thursday. “Recent weeks’ successive declines in mortgage rates will help qualify more home buyers.”

Chen Zhao, Redfin’s economics research lead, offered a sobering assessment. “My advice for serious homebuyers is to compare housing costs to recent highs instead of long-ago lows,” Zhao remarked. “Housing costs are at their lowest level in three months and it’s unlikely they will drop significantly anytime soon.”

I’m not sure what Zhao meant by “long-ago.” To be sure, 2019 seems like 20 years ago given all that’s happened. But the fact is, US home prices are up 30% in less than four years. That’s great if you already owned a home (or bought one in 2020 or 2021). If not… well, “thoughts and prayers.”

For his part, Yun went on to emphasize that supply constraints are still limiting the opportunities for would-be homeowners. “Limited housing inventory is significantly preventing housing demand from being fully satisfied,” he said Thursday. “Multiple offers, of course, yield only one winner.”