Pending home sales fell 2.4 percent in the month of August and 0.2 percent year-over-year, more evidence that the housing market has lost steam in recent months.
According to the National Association of Realtors, the pending home sales index dropped to 108.5 after a bounceback in July.
Pending home sales reflect contracts — not closed sales — on existing homes and can potentially offer early indications of the housing market’s movement. The NAR considers 100 to be a sign of a healthy figure in the market.
Although they hit a 10-year high in April, pending contracts have fallen in three of the past four months. Economists polled by the Wall Street Journal expected sales to be flat in August. This was the worst performance since January, NAR data shows.
Lawrence Yun, the chief economist at NAR, said in a statement that the recent fall can be attributed to rising prices in recent years and a shortage of homes for sale.
Yun expects existing-home sales in 2016 to tally around 5.36 million, a 2.1 percent increase from 2015 and the highest pace since 2006 (6.48 million). According to the NAR, pending home sales in the Northeast rose 1.3 percent to 98.1 in August and is up 5.9 percent year-over-year. The South, Midwest and West all fell year-over-year in August.
“Contract availability slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success in signing a contract,” Yun said. [WSJ] — Miriam Hall