Pending home sales fell -1.8% in July despite mortgage rates dropping to 2.84% at the end of July.
Summer Home Market Feeling an Icy Chill
Pending sales contracts to purchase existing homes fell -1.8% from June to July, according to the National Association of REALTORS® (NAR). On a year-over-year basis, pending sales were down -8.5%.
(Remember that pending sales contracts are future indicators of sales that close in one or two months down the road.)
The reason? Skyrocketing home prices. The median price for an existing home leapt to an increase of +18% y/y, according to Realtors.com. Though much of that +18% median price jump was the result of buying activity being skewed towards higher price tiers within the market, affordability for average homebuyers has dropped dramatically in the last several months.
Even NAR’s Chief economist Lawrence Yu said, “The market may be starting to cool slightly…That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months…” And lower prices?
Regional Sales Differences
According to NAR’s pending sales index, regional sales differences looked like this in July:
- Northeast – signed contracts dropped -6.6% m/m and -16.9% y/y
- Midwest – pending sales dropped -3.3% m/m and -8.5% y/y
- South – -0.9% m/m and -6.7% y/y
- West – +1.9% m/m and -5.7% y/y
Yun said, “Homes listed for sale are still garnering great interest, but the multiple, frenzied offers – sometimes double-digit bids on one property – have dissipated in most regions.
Inventory Levels & Closed Sales
Inventory at the end of July totaled 1.32M units. That 1.32M units represented an inventory increase of +7.3% m/m and a decline of -12% y/y. There was a 2.6-month supply of unsold inventory in July.
Closed sales of existing home increased for the second consecutive month in July though no specific data was given.
Thanks to CNBC.