Pending home sales took a dip once again in August, marking the third month of declines in the past four months, and bringing pending home sales to the lowest level since January, according to the latest report by the National Association of Realtors.
This comes just after last month showed pending home sales in July hit the second highest point in a decade.
The Pending Home Sales Index decreased by 2.4% to 108.5 in August, down from a downwardly-revised 111.2 in July and from last year’s 108.7.
An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales.
“Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract,” NAR Chief Economist Lawrence Yun said.
“In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings,” Yun said.
Without new housing construction, the housing recovery could stall, Yun said. Housing inventory declined annually for 15 consecutive months, and properties close 11 days quicker than August last year.
After last month’s increase of 5.1%, existing home prices rose annually for 54 consecutive months.
“There will be an expected seasonal decline in new listings in coming months, which could accelerate price appreciation and make finding an affordable home even more of a struggle for would-be buyers,” Yun said.
“Given the current conditions, there’s not much room for sales to march again towards June’s peak cyclical sales pace,” he said.
After last month’s decline, existing-home sales in 2016 will be around 5.36 million, a 2.1% increase from 2015 and the highest annual pace since 2006, Yun said. The national median existing-home price growth is forecast this year to rise around 4%.
