The August decrease marks the fifth drop in six months, with the index now at its lowest level since January 2016.
“August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” NAR Chief Economist Lawrence Yun said. “Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”
Yun also said he believes the housing market has essentially stalled as several areas continue to see housing shortages with little relief in sight. He now expects existing-home sales of 5.44 million for the year, 0.2% below the 5.45 million pace in 2016. The national median existing-home price is forecast to increase about 6%. These compare to a 3.8% increase in existing sales and 5.1% increase in prices recorded in 2016.
“The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year,” Yun said. “The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9%.”
The South saw pending home sales fall 3.5% in August to an index of 118.8 as the Houston region faced damage from Hurricane Harvey. NAR said the South should see overall sales to slow further given the pause in Florida activity following Hurricane Irma. The Northeast saw its pending home sales index fall 4.4% to 93.4, while the Midwest recorded a 1.5% drop to 101.8. The West’s index slipped 1% to 101.3.
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An index of pending home sales based on contract signings fell 2.6% to 106.3 in August from 109.1 in July, according to the National Association of Realtors (NAR).