Pending Home Sales Decline in August, but Remain Healthy

The National Association of Realtors (NAR) found pending home sales fell in August as contract signings modestly declined, but they still project healthy supply and demand and price growth.

Year-over-year for 12 consecutive months, pending home sales have increased.

According to the NAR's Pending Home Sales Index (PHSI), contract signings decreased 1.4 percent to 109.4 in August, down from 110.9 in July. However, the index is still 6.1 percent higher than 103.1 recorded in August 2014.

"Pending sales have leveled off since mid–summer, with buyers being bounded by rising prices and few available and affordable properties within their budget," said Lawrence Yun, NAR chief economist. "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."

NAR also forecasts the national median existing–home price is expected to increase 5.8 percent to $220,300 in 2015. Meanwhile, Yun forecasts total existing–home sales this year to increase 7.0 percent to around 5.28 million.

The PHSI in the Northeast fell 5.6 percent to 93.3 in August, but is still 8.9 percent above a year ago, while in the Midwest, the index inched down 0.4 percent to 107.4 in August, and is now 6.5 percent above last year.

The South's pending home sales dropped 2.2 percent to 121.5 in August, but are still 4.1 percent higher than last August. Pending home sales in the West increased 1.8 percent in August to 104.9, and is now 7.6 percent above a year ago.

Yun noted that sales should be able to maintain their current pace, but he cautions of likely barriers that could impact housing.

"The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being,"  Yun said. "Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales."

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