Pending home sales slipped to their second-lowest level, falling for five straight months on an annual basis according to the latest Pending Home Sales Index for May published by the National Association of Realtors (NAR) on Wednesday.
The index, which is a forward-looking indicator based on contract signings decreased 2.2 percent year over year and by 0.5 percent from April 2018 to May 2018.
The spring buying season, according to Lawrence Yun, Chief Economist at NAR was one of "unmet expectations," as the housing markets continued to remain highly competitive and fast-moving, but without "enough new and existing inventory for sale, activity has essentially stalled."
"With the cost of buying a home getting more expensive, it's clear the summer months will be a true test for the housing market. One encouraging sign has been the increase in new home construction to a 10-year high," Yun said.
Almost all experts agree that supply is a headwind that the market has been grappling with this year. "Supply problems are particularly acute for lower-priced homes," said Tendayi Kapfidze, Chief Economist at LendingTree.
According to Danielle Hale, Chief Economist at Realtor.com, "Because high prices and limited inventory continue to be the dominant conditions in housing markets across the country, pending home sales and existing home sales are expected to remain weak, and total existing home sales in 2018 may register a decline from 2017."
In this video, Yun talks about all the other factors that affected home sales and the regions most impacted by them: