August Pending Home Sales Drop Unexpectedly
Pending home sales defied recent data by declining in August, the National Association of Realtors reported yesterday.
The NAR Pending Home Sales Index fell by 1.4 percent to 109.4 in August from 110.9 in July, but was 6.1 percent above a year ago (103.1). NAR said on a year over year basis, pending home sales rose for the 12th consecutive month.
Regionally, pending home sales rose only in the West, increasing by 1.8 percent in August to 104.9, and improved by 7.6 percent from a year ago. In the Northeast, sales fell by 5.6 percent to 93.3 but improved by 8.9 percent from a year ago. In the Midwest the index fell by 0.4 percent to 107.4 but rose by 6.5 percent from a year ago. Sales in the South declined by 2.2 percent to 121.5 in August but were 4.1 percent from a year ago.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said despite the “unexpected” August decline, the index remains at a healthy level and the drop does not throw off the upward trend in pending home sales.
“The slight slip in contract signings likely reflects homebuyer angst due to financial market volatility,” Vitner said. “However, in September the [National Association of Home Builder] housing market index rose to a cycle high, indicating builder confidence remains solid.”
NAR Chief Economist Lawrence Yun agreed, saying demand continues to outpace housing supply and elevate price growth in numerous markets. “Pending sales have leveled off since mid-summer, with buyers being bounded by rising prices and few available and affordable properties within their budget,” he said. “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.”
