Pending home sales have dropped for seven straight months

NAR says that sales are slowing because of high pricing

National /
Aug.August 29, 2018 02:00 PM
A house for sale and National Association of Realtors Chief Economist Lawrence Yun (Credit: Pixabay)

Pending sales for existing homes nationwide dropped by 0.7 percent in between July and June, and have now fallen for seven straight months on an annual basis.

The National Association of Realtors’ study of those sales suggests that the slowdown is because of high pricing. Pending sales in July were down 2.3 percent year over year. The organization’s analysis is based on contracts signed for existing single-family homes, condos and co-ops, also making it an indicator of what closed sales could look like in a month or two.

The western U.S. saw the biggest year-over-year dip in pending sales, dropping by 5.8 percent. Sales in the southern U.S., which has been one of the stronger regions in recent years, dipped by 0.9 percent.

NAR Chief Economist Lawrence Yun said those declines “weighed down” the overall national numbers. He said the latest numbers are a reflection of overheated markets, pointing to the western U.S. as the prime example.

Years of inadequate supply and strong job growth “have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it,” Yun said.

The latest S&P CoreLogic Case-Shiller Index suggested that pricing may be hitting a ceiling in many major U.S. metros. Home prices in 20 cities part of the index rose at their slowest pace since 2016. Climbing mortgage rates are also likely affecting the pace of price growth and sales.

Yun added that if new home construction picked up, prices would likely come down to a point that first-time buyers could afford again. First-time buyers spent around 23 percent of their income on a typical starter home in the second quarter, up 2 percent from the first quarter.

He predicted sales of existing homes this year would drop by 1 percent to 5.46 million and pricing would increase by around 5 percent.


Related Articles

arrow_forward_ios
The L.A. County median of $790,000 was 23 percent higher than last June (Getty)
SoCal home prices reach yet another record high in June
SoCal home prices reach yet another record high in June
(iStock)
LA County signed contracts tick down — slightly — in June
LA County signed contracts tick down — slightly — in June
Prices may be pushed up by a lack of inventory (Getty)
SoCal home prices hit another record high in May
SoCal home prices hit another record high in May
Home sales remain strong in Los Angeles County as over 5,500 properties went into contract last month. Inventory, however, is still lagging behind. (iStock)
Another 5.5K LA homes went into contract in May
Another 5.5K LA homes went into contract in May
(iStock)
SoCal home sales kept rising in April
SoCal home sales kept rising in April
L.A. County signed contract totals stayed strong in April, but new listings couldn't keep up. (Getty)
LA’s signed contracts in April dwarf new listings
LA’s signed contracts in April dwarf new listings
Fewer homes are selling across Southern California, but low supply helped push pricing up across the region.
Far fewer SoCal homes traded in April, but prices rose
Far fewer SoCal homes traded in April, but prices rose
Home bidding wars cool a bit nationwide (Credit: iStock)
Fewer LA buyers willing to pay above ask these days
Fewer LA buyers willing to pay above ask these days
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...