Pending Home Sales Declined 2.4% in August

Washington, DC, September 29, 2016—The Pending Home Sales Index declined 2.4% to 108.5 in August from a downwardly revised 111.2 in July and is now slightly lower (0.2%) than August 2015 (108.7), according to the National Association of Realtors. With last month's decline, the index is now at its second lowest reading this year after January (105.4).

Lawrence Yun, NAR chief economist, says suffering supply levels have taken the wind out of the momentum the housing market experienced earlier this year. "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," he 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."

According to Yun, evidence is piling up that without more new home construction the current housing recovery could stall. Housing inventory has declined year-over-year for 15 straight months; properties in August typically sold 11 days quicker than in August 2015 and after increasing 5.1% last month, existing-home prices have risen year-over-year 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," added Yun.