Pending Home Down for 7th Straight Month

Pending home sales fell again in July and have now fallen on an annual basis for seven straight months, the National Association of Realtors reported yesterday.

The Pending Home Sales Index decreased by 0.7 percent to 106.2 in July from 107.0 in June. With last month’s decline, contract signings are now down 2.3 percent year-over-year.

Regionally, drops in pending sales in the South and West offset gains in the Northeast and Midwest. In the South, pending home sales fell by 1.7 percent to 122.1 in July and by 0.9 percent from a year ago. The West fell by 0.9 percent in July to 94.7 and by 5.8 percent below a year ago. In the Northeast, pending sales rose by 1.0 percent to 94.6 in July, but fell by 2.3 percent below a year ago. In the Midwest the index inched up by 0.3 percent to 102.2 in July, but fell by 1.5 percent from a year ago.

NAR Chief Economist Lawrence Yun said the housing slowdown has not bottomed out. “It’s evident in recent months that many of the most overheated real estate markets–especially those out West–are starting to see a slight decline in home sales and slower price growth,” he said. “The reason sales are falling off last year’s pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it.”

Yun said rising inventory levels, particularly if new home construction finally starts picking up, should help slow price appreciation to 2-4 percent, “which will help aspiring first-time buyers, and be good for the long-term health of the nation’s housing market,” he said.