Pending home sales slip but not in the west

by Steve Randall01 Sep 2017
For the fourth time in five months pending home sales slipped in July according to the National Association of Realtors.

Its Pending Home Sales Index was down 0.8% to 109.1 in July from a downwardly revised 110.0 in June. That takes the index to 1.3% below a year ago. It has fallen on an annual basis in three of the past four months.

Three out of the four main regions declined with the Northeast down 0.3% but still 2.4% above a year ago; the Midwest down 0.7% (2.8% lower than July 2016); while the South fell 1.7% (0.2% below a year ago).

The only region to gain was the West which was up 0.6% in July but still 4% below a year earlier.

The issue is not one of demand though, as NAR chief economist Lawrence Yun explains:

"Buyer traffic continues to be higher than a year ago, the typical listing has gone under contract within a month since April, and inventory at the end of July was 9.0% lower than last July."

Yun says that unless supply “miraculously improves” the sales environment will not rebound. However, he says that the kind of inventory gains required are unlikely.

Overall sales are also likely to be impacted by a pause in activity in the Houston region due to Hurricane Harvey.

Existing home sales are predicted to end the year at around 5.49 million, 0.7% above 2016. The median existing home price is expected to rise 5%.

August sales are also looking weaker according to data from online real estate marketplace Ten-X.

Its analysis show a seasonally adjusted annual rate (SAAR) between 5.33 and 5.68 million with a targeted number of 5.43 million, down a slight 0.1 percent from NAR's reported July sales.

"Existing home sales are in a classic 'glass half full/glass half empty' situation right now," said Ten-X Executive Vice President Rick Sharga. "While sales in August should be up slightly from last year, our nowcast model shows that they'll continue their downward trend and be lower than July sales. The combination of falling inventory and rising prices is proving to be a difficult hurdle for the market to overcome."

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