Autumn home sales are expected to decline as contract signings fell for a second consecutive month according to the National Association of Realtors® (NAR) Pending Home Sales Index (PHSI) but should remain above last year’s levels.
The future contract signings indicator fell by 1.3 percent to 109.5 in July from 110.9 in June but was still 6.7 percent higher than in July of last year when the Index was at 102.6. It was the second consecutive month that the Index has fallen.
In May of this year, the Index had reached its highest level in over six years.
Lawrence Yun, chief economist of NAR, stated, “The modest decline in sales is not yet concerning, and contract activity remains elevated, with the South and Midwest showing no measurable slowdown. However, higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West.”
Three of the four regions in the Index posted declines in their monthly level of sales contract activity, while the same number of regions reported a higher level of contract signings when compared to a year ago.
The Northeast posted the largest monthly decline, falling 6.5 percent from the previous month while the West followed with a decline of 4.9 percent.
The Midwest suffered the smallest decline of 1.0 percent while the South reported the only increase of 2.6 percent.
The Midwest reported the largest increase in contract signings compared to July of last year with a 14.5 percent increase followed by the South which reported a gain of 7.7 percent and the Northeast was 3.3 percent ahead of last year. The West region reported the only decline from last year of 0.4 percent.
The PHSI is a forward looking indicator which generally indicates closings one to two months in the future.
Yun added, “More homes clearly need to be built in the West to relieve price pressure, or the region could soon face pronounced affordability problems.”
Tags: pending home sales, existing home sales, contract signings
National Association of Realtors
Reported by Chris Moore