Photo: Paul Sableman/Flickr
For the third time in the last four months, pending home sales US declined, according to the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI). Across the US, PHSI readings were down for August, except in the Northeast where higher inventory levels gave homebuyers more options and opportunities to go into contract on a home.
Nationally the PHSI dropped 2.4 percent to 108.5 from the previous month’s revised reading of 111.2. August’s PHSI was only 0.2 percent lower than the 108.7 recorded in August 2015.
With August’s decline, the index is now at its second lowest reading for this year — only up slightly from January’s low of 105.4.
The PHSI is a forward-looking indicator based on contract signings. Sales are considered “pending” once contracts are signed but the transaction has yet to close.
The Northeast was the only US region to record an increase in pending home sales in August. The PHSI in the Northeast rose 1.3 percent to 98.1 in August from the previous month. This is nearly 6 percent higher than last year’s reading.
The West recorded the largest decline in August, falling 5.3 percent to 102.8 from July’s reading. However, it is only 0.6 percent lower than August 2015’s reading.
Pending home sales also recorded a notable drop in the South in August, falling 3.2 percent month-over-month to 119.8. August’s reading is 1.5 percent lower than last year.
There was a slight 0.9 decrease in the Midwest to 104.7 in August compared to the previous month. This was 1.7 percent lower than last year.
Lawrence Yun, NAR chief economist, says suffering supply levels have taken the wind out of the momentum the housing market experienced earlier this year.
“Contract activity slackened throughout the country in August except for in the Northeast,” said Yun in a release.
“In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings,” he added.
Yun also pointed out that an expected seasonal decline in new listings could accelerate price appreciation and make finding an affordable home even more challenging for some homebuyers.
You can view the entire NAR report here.