Pending home sales edged down in July, falling 1.8% to a Pending Home Sales Index (PHSI) of 110.7, according to the National Association of Realtors (NAR) Pending Home Sales Report.
The drop marks the second consecutive month that PHSI has declined. The only region that did not decline month over month was the West.
Contract signatures were also down 8.5% year-over-year, and every geographic region recorded declines on an annual basis.
The PHSI is a forward-looking metric that indicates expected future home sales, based on contract signatures. An index of 100 represents the level of contract activity from 2001.
NAR chief economist Lawrence Yun said low inventories continued to hamper potential buyers, but the market appears to have cooled a bit from its most intense point in the spring.
“The market may be starting to cool slightly, but at the moment there is not enough supply to meet demand from potential buyers,” Yun said. “That said, inventory is slowly rising and home buyers should start to see more options in the coming months. There is still a lot of interest in homes listed for sale, but multiple and frantic offers – sometimes two-in-one offers. numbers on a property – have dissipated in most areas. “
Yet some buyers continue to forgo assessments and inspections. According to Yun, 27% of buyers waived assessment and inspection contingencies in July, likely in an attempt to speed up their transaction.
George Ratiu, director of economic research at Realtor.com, said in an emailed statement to Inman that the slight influx of inventory has also had a palpable impact on the market, an impact that will hopefully benefit retailers. first-time buyers in the coming months.
“In a notable change, homeowners reacted to market trends and started listing homes in greater numbers,” Ratiu said. “Realtor.com weekly data saw more new listings in 19 of the last 22 weeks, compared to the same period in 2020. Prices reflect the influx of supply, increasing at a more moderate rate of 8.6% year-on-year, compared to double-digit earnings this past year. With mortgage rates still below 3.0%, first-time buyers can expect a fall with more affordable home options.
By region, the PHSI fell the most in the northeast, dropping 6.6% between June and July to reach a PHSI of 92.0. This figure was down 16.9% year over year.
The index fell 3.3% in the Midwest to 104.6, also down 8.5% from a year earlier.
In the South, the PHSI fell 0.9 percent to 130.9, down 6.7 percent year-over-year.
Meanwhile, in the West, the only region that saw a month-over-month increase, the index rose 1.9% to 99.8, but was still down 5.7 % compared to July 2020.
Email Lillian Dickerson