Slowed contract signings in September are a likely sign that home price growth will soon come back down to earth, NAR Chief Economist Lawrence Yun said.

Pending home sales slipped 2.3 percent in September 2021 from the previous month, and decreased 8 percent year over year to an index of 116.7, the National Association of Realtors (NAR) reported on Thursday.

A Pending Home Sales Index (PHSI) of 100 represents the level of contract activity in 2001.

All four major geographical regions saw contract signings drop at both a monthly and an annual rate.

The slowdown in market activity should help bring home price growth back down to earth, NAR Chief Economist Lawrence Yun noted in NAR’s report, which will no doubt be a welcome respite for consumers.

Lawrence Yun | Photo credit: NAR

“Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market is running comfortably ahead of pre-pandemic activity,” Yun said. “It’s worth noting that there will be less inventory until the end of the year compared to the summer months, which happens nearly every year.”

Although some buyers decided to press pause on their home search amid intense competition and soaring prices this summer, Yun said a calming market and increased inventory will likely bring those buyers back, come 2022.

Strong rent growth as a result of buyers opting out of the for-sale market will likely also contribute to their return to the for-sale market soon.

“Rents have been mounting solidly of late, with falling rental vacancy rates,” Yun said. “This could lead to more renters seeking homeownership in order to avoid the rising inflation, so an increase in inventory will be welcomed.”

Given the current available data, NAR anticipates home sales to have increased by 6.4 percent over the course of 2021 by year’s end. The association also anticipates sales will decrease by 1.7 percent in 2022, due to forecasts of rising mortgage rates. Yun anticipates home prices will see more moderate growth of just 2.8 percent in 2022, following the staggering 14.7 percent home price growth witnessed in 2021.

Danielle Hale | Photo credit:

“Although home sales activity has retreated from its earlier highs, it is roughly stabilizing at a level of activity that is above pre-pandemic pace thanks to a combination of eager young buyers, lingering pandemic savings, and low mortgage rates creating opportunity despite ongoing home price gains and climbing mortgage rates,” Danielle Hale, chief economist at, said in a statement emailed to Inman.

“Whether the housing market will maintain this plateau and begin to grow again or slide back is dependent on how the economy evolves, with home construction and income growth serving as the main wildcards,” Hale added.

Pending home sales by region

The PHSI took the greatest hit year over year in the Northeast, where the index fell 18.5 percent from September 2020 to 93.1. Month over month, the index was down 3.2 percent.

In the West, the index was down 7.2 percent from the year before to 105.3, down just 1.4 percent from August 2021.

The PHSI declined 5.8 percent year over year in both the Midwest and the South to 111.4 and 139.1, respectively. In the Midwest, that figure was a 3.5 percent decline from the previous month, and in the South, it was a 1.4 percent decline month over month.

Email Lillian Dickerson

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