Pending home sales rebounded from their summertime slump in August, according to the latest report from the National Association of REALTORS® (NAR).
NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, increased by 8.1% last month, climbing to 119.5.
While each region experienced a monthly increase in contract signings, year-over-year activity dropped 8.3%, with the northeast seeing the most substantial decline.
Despite recovering from two consecutive months of contract signing declines, experts at NAR say affordability issues continue to weigh on buyers.
According to the report, home price gains are triple the wage growth, which experts suggest is an unsustainable imbalance in the market.
Regional Breakdown:
Northeast
+4.6% MoM — Now 96.2 PHSI
-15.8% YoY
Midwest
+10.4% MoM — 115.4 PHSI
-5.9% YoY
South
+8.6% MoM — 141.8 PHSI
-6.3% YoY
West
+7.2% MoM — 107.0 PHSI
-9.2% YoY
What the Industry Is Saying:
“Rising inventory and moderating price conditions are bringing buyers back to the market. Affordability, however, remains challenging as home price gains are roughly three times wage growth.”
“The more moderately priced regions of the South and Midwest are experiencing stronger signing of contracts to buy, which is not surprising. This can be attributed to some employees who have the flexibility to work from anywhere, as they choose to reside in more affordable places.” — Lawrence Yun, NAR Chief Economist
“As pandemic concerns lingered and companies delayed office re-openings, many Americans were eager to lock in affordable mortgage rates, even as prices continued rising at double-digit rates.”
“Real estate markets are moving toward a new equilibrium, as the pandemic frenzy to find a more spacious home in greener suburbs and lock in historically-low rates has given way to a more tempered search for affordability. Record-high prices are motivating buyers to be more selective, and with monetary tightening expected to push rates higher, buyers are likely to become even more cost-conscious.”
“The days of liberal price-escalation clauses, home inspection waivers and dozens of multiple bids are likely behind us, as the share of homes for sale with price reductions is growing. For millennials and other first-time buyers, today’s markets are signaling a return toward seasonal trends, as improvements in the number of available homes for sale are tamping down the unsustainable price trajectory of the last 12 months. A more measured pace of price appreciation is good news for millions of first-time buyers who felt locked out of the housing market earlier this year.” — George Ratiu, Manager of Economic Research at realtor.com®
For more information, please visit www.nar.realtor.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.
