By Kerry Smith
Year-to-year contract signings declined 8.5%. NAR Chief Economist Lawrence Yun says the market may be cooling a bit, but there’s still not enough supply to match demand – yet “inventory is slowly increasing” and buyers should “see more options in the coming months.”
WASHINGTON – Pending home sales dipped modestly in July for two consecutive months of declines, according to the National Association of Realtors® (NAR). Only the West region registered a month-over-month gain in contract activity; the other three U.S. regions in the study saw drops. Year-to-year, all four regions decreased.
The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – declined 1.8% to 110.7 in July. Year-over-year, signings fell 8.5%. An index of 100 is equal to the level of contract activity in 2001.
“The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers,” says Lawrence Yun, NAR’s chief economist.
“That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months,” Yun adds. “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.” However, “even in a somewhat calmer market, a number of potential buyers are still choosing to waive appraisals and inspections.”
As of July, 27% of buyers bypassed appraisal and inspection contingencies, in most cases to accelerate the homebuying process, Yun says.
July pending home sales regional breakdown: Month-over-month, the Northeast PHSI fell 6.6% to 92.0 in July, a 16.9% decrease from a year ago. In the Midwest, the index dropped 3.3% to 104.6 last month, down 8.5% from July 2020.
Pending home sales transactions in the South declined 0.9% to an index of 130.9 in July, down 6.7% from July 2020. The index in the West rose 1.9% in July to 99.8, but it’s still down 5.7% year-to-year.
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