What does the pullback in pending home sales mean for the housing market?
National Association of Realtors releases latest report
Home sales based on contract signings have continued to decline for the second straight month – a sign that the red-hot housing market could be cooling off, according to the National Association of Realtors.
NAR's Pending Home Sales Index (PHSI), released Monday, showed a 1.8% month-over-month drop in July to a reading of 110.7. Year over year, the index was down by 8.5%.
"The market may be starting to cool slightly, but at the moment, there is not enough supply to match the demand from would-be buyers," said NAR chief economist Lawrence Yun. "That said, inventory is slowly increasing, and home shoppers should begin to see more options in the coming months."
Yun noted that homes listed for sale are still seeing strong demand, "but the multiple, frenzied offers – sometimes double-digit bids on one property – have dissipated in most regions."
He added that even in a somewhat calmer market, about 27% of homebuyers still choose to waive appraisals and inspections to speed up the home buying process.
Broken down by regions, the Northeast PHSI posted a 6.6% decline to 92, Midwest PHSI dropped 3.3% to 104.6 last month, and the South index dipped 0.9% to 130.9. Meanwhile, pending home sales in the West increased 1.9% to 99.8% in July.
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