The Pending Home Sales report is a forward-looking gauge of U.S. home and last month we saw that sales slipped in August. It’s further evidence that the surge we had seen in the first half of the year is slowing. Home sales typically close within a couple months after signing.
The National Association of Realtors said last week with the release of its pending home sales index, which is based on signings for purchases of previously owned homes, that sales declined 1.4 percent to a seasonally-adjusted figure of 109.4 in August, from a reading of 110.9 in July. The association blamed the dip on rising prices and a limited supply of homes on the market.
The report suggests home sales could soften in the third quarter.
Housing economists had expected a 0.4 percent rise in August. Sales are still well above where they were a year ago. The index rose 6.1 percent in August from a year earlier, the 12th consecutive annual increase.
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.
Other recent data point to steady demand in the housing market this summer. Sales of new, single-family home sales, which account for about 10 percent of the market, rose by 5.7 percent last month and the pace of completed existing-home sales has returned to its pre-recession levels, although sales slipped in August after a strong start to the year. Despite the recent weakness evident in the data on the existing home sales market, housing economist maintain upbeat on the housing market.
Despite a large increase in sales, new construction of single-family homes only increased 8.7 percent from a year ago in August, according to data from the Commerce Department. But builder sentiment is the highest it has been in nearly a decade, according to a survey of home builders.
Stronger job gains have also helped build momentum in the housing market. Interest rates also remain at historical lows. The average interest rate for a 30-year fixed rate mortgage was 3.91% in August, according to Freddie Mac, the lowest it has been since May.
According to Monday’s report, pending home sales rose modestly in the West, but declined in every other region.
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