US pending home sales fall slightly but still well above a year ago

Pending home sales in the United States retreated in August but remained at a healthy level of activity and have now risen year on year for 12 consecutive months, the latest real estate data shows.

A modest increase in the West was offset by declines in all other regions but demand continues to outpace supply, according to the index report from the National Association of Realtors.

The Pending Home Sales Index, a forward looking indicator based on contract signings, decreased 1.4% to 109.4 in August from 110.9 in July but is still 6.1% above August 2014 when it was 103.1.

Lawrence Yun, NAR chief economist, said that even with the modest decline in contract signings, demand continues to outpace housing supply and elevate price growth in numerous markets.

‘Pending sales have levelled off since the middle of summer, with buyers being bounded by rising prices and few available and affordable listings within their budget. Even with existing housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago,’ he explained.

According to Yun, sales in the coming months should be able to roughly maintain their current pace. However, he warns that there are looming speed bumps that have the potential to impact housing.

‘The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being. Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales,’ Yun added.

The national median existing home price is expected to increase 5.8% in 2015 to $220,300. Yun forecasts total existing home sales this year to increase 7% to around 5.28 million, about 25% below the prior peak set in 2005 when they were 7.08 million.

A breakdown of the figures shows that the PHSI in the Northeast fell 5.6% to 93.3 in August, but is still 8.9% above a year ago. In the Midwest the index inched down 0.4% to 107.4 in August and is now 6.5% above August 2014.

Pending home sales in the South declined 2.2% to an index of 121.5 in August but are still 4.1% above last August. The index in the West rose 1.8% in August to 104.9 and is now 7.6% above a year ago.

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Source: Property News Spain