For the fourth time in five months, pending home sales fell, according to the National Association of Realtors [1] (NAR). NAR Chief Economist Lawrence Yun said pending sales were weaker in most areas in July because homebuyers saw limited options for purchase and continued competition in the market.
“The housing market remains stuck in a holding pattern with little signs of breaking through,” said Yun. “The pace of new listings is not catching up with what’s being sold at an astonishingly fast pace.”
The median sales price rose 38 percent in the last five years, but hourly wage has only increased 12 percent. According to Yun, this trend is unsustainable and putting considerable pressure on affordability in select markets, ultimately pricing out households that typically would have been looking to buy in others.
“Inventory at the end of July was 9.0 percent lower than last July,” said Yun. “The reality, therefore, is that sales in coming months will not break out unless supply miraculously improves. This seems unlikely given the inadequate pace of housing starts in recent months and the lack of interest from real estate investors looking to sell.”
Yun expects existing-home sales to end the year at around 5.49 million, up 0.7 percent since 2016 (5.45 million). In 2016, existing home sales increased 3.8 percent and prices rose 5.1 percent. Currently, the national median existing-home price is expected to increase 5 percent.
Yun said, “The combination of weaker contract signings and the expected pause in activity in the Houston region because of Hurricane Harvey will likely slow overall sales growth in coming months.”