The National Association of Realtors® Pending Home Sales Index looks at the total number of executed contracts to buy homes for sale and condos for sale each month. Because the study looks at signed contracts and not actual closings, the findings are a reliable measurement to forecast future home sales.
In August of this year, the index was down 1.4 percent. However, despite the drop, the index continues to remain 6.1 percent higher that last year’s level and has now increased above year-before levels for twelve consecutive months. NAR’s® chief economist, Lawrence Yun, said that demand to purchase is still ahead of the supply of inventory which will continue to put upward pressure on housing prices.
Mr Yun added, “Pending sales have leveled off since mid-summer, with buyers being bounded by rising prices and few available and affordable properties 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.” Putting it differently, in spite of a more challenging environment for home buyers, purchase demand is still strong.
Looking closely at the findings, Pending Sales were up in the West region and unchanged from last month in the Midwest. The declines in August were confined to the South and Northeast areas.