Pending home sales finally saw positive growth in August, after two straight months of declines in June and July, the National Association of Realtors reported.
Pending home sales rose 8.1. % in August, after two consecutive months of declines in June and July, according to the National Association of Realtors (NAR) Pending Home Sales Index (PHSI) released Wednesday.
The news follows a week in which house price growth figures released by Case-Shiller for July revealed that the United States had experienced record price growth, unprecedented since at least 1987.
The country’s four major regions posted monthly gains in contract activity, while simultaneously reporting year-over-year declines in contract activity.
PHSI jumped to 119.5 in August, up 8.1% from July and 6.3% from June, but down 8.3% year-on-year. A PHSI of 100 is equivalent to the level of contractual activity present in 2001.
Despite August’s gains in contract signing, housing affordability remains a barrier for some buyers hoping to enter the market.
“Rising inventories and moderating pricing conditions are bringing buyers back into the market,” NAR chief economist Lawrence Yun said in a statement. “Affordability, however, remains difficult, as the gains in house prices are about three times greater than the growth in wages. “
“Buyers hit headwinds, with a 10 basis point hike in average mortgage rates combined with double-digit price hikes to reduce affordability,” wrote George Ratiu, head of economic research at realtor.com, in an e-mailed statement to Inman. As families with school-aged children rushed to close deals ahead of the new school year, other potential buyers took a break from a rapidly changing real estate market, causing sales to decline over the course of the year. month.”
Yun noted that the more affordable Southern and Midwestern markets are seeing the biggest gains amid the general wave of rising home prices across the country.
“The more moderately priced areas of the South and Midwest are seeing more signings of purchase contracts, which is not surprising,” said Yun. “This can be attributed to some employees who have the opportunity to work from anywhere because they choose to reside in more affordable locations. “
By region, the Midwest posted the largest monthly gains, with the region’s PHSI increasing 10.4% to 115.4. On an annual basis, the index fell 5.9% from August 2020.
Pending home sales rose 8.6% in the South to an index of 141.8, while also falling 6.3% from the previous year.
In the West, the PHSI rose 7.2% from July to 107.0, but was down 9.2% from August 2020.
The Northeast PHSI recorded the lowest monthly gains in August, increasing 4.6% to 96.2, down 15.8% from the previous year.
Email Lillian Dickerson