MarketNsight reported that pending home sales were up in October, compared to the same time last year. The progression from week one to week four of October increases by 41%, 29%, 12% and 14%, respectively. 

“Was this caused by massive price increases or the lead up to the election? No, and no,” MarketNsight and ViaSearch President John Hunt said in the press release. “Importantly, resale pending sales did not drop in October. If the election were a factor, resale would have also been affected, especially since resale accounts for 80% of all demand. As for price, new list prices are flat year-to-year since January. Resale list prices are up year-to-year 9% since January. Again, strong evidence that price is not the reason for the drop-off in new homes.”

New home closings dropped during October after going up during the months of June and July. According to the press release, the downward trend started in August after being up by 25% and 29% in the two months prior.

“The sharp drop-off in new closings and pendings was not caused by lack of demand, price increases, or the election,” Hunt said in the press release. “The only answer left is lack of supply. Resale inventory is “On Demand” or “Just in Time” inventory. One can decide to list their existing home in a matter of seconds using a Realtor or tools like Zillow and Trulia, quickly filling the void left by lack of new home inventory. That is happening right now.”

Permits are rising along with the decrease of new pendings and closings because of the lack of inventory. Low interest rates and very low inventory make the demand for new homes built at the right price. Permits for new homes have hit record highs that were seen in 2007 in the last three months. 

“I believe this upward trend will continue and we could end 2020 up 5% to 10% over 2019,” Hunt said. “Pretty amazing in the midst of a pandemic.”