Pending home sales increased 0.5 percent in September with substantial gains in both the West and Midwest regions, according to the latest information from the National Association of Realtors (NAR).
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, increased 0.5 percent to 104.6 in September from 104.1 in August. Despite the small month-over-month improvement, contact signings continued to drop on an annual basis. September marked the ninth consecutive month of annual declines.
NAR Chief Economist Lawrence Yun says that although we’re seeing year-over-year decreases, the latest monthly gain indicates a good, stabilizing trend.
“This shows that buyers are out there on the sidelines, waiting to jump in once more inventory becomes available and the price is right,” Yun said in a statement.
Yun continues to attribute the restrained market to lack of inventory, particularly in the modestly-priced range. However, he says that when we look at the larger picture of the last few decades, the current affordability climate is still favorable.
“When compared to the year 2000, when the housing market was considered very healthy and home sales figures were roughly equivalent, the affordability conditions were much lower compared to now,” said Yun. “So even though affordability has been falling recently, the demand for housing should remain steady.”
Yun went on to say that the economic improvements that have been taking place could soon impact the real estate industry and overall housing market.
“The general condition of the economy is excellent, it simply has not lifted home sales this year,” said Yun. “Home prices are still rising, so people who are purchasing are still seeing wealth gains.”
September Pending Home Sales Regional Breakdown
The PHSI in the Northeast dropped 0.4 percent to 92.3 in September, and is now 2.7 percent below a year ago.
The index for the Midwest gained 1.2 percent to 102.4 in September and is 1.1 percent lower than September 2017.
Pending home sales in the South dropped 1.4 percent to 119.6 in September; however, it’s 3.3 percent higher than a year ago.
The PHSI in the West increased 4.5 percent in September to 93.1 and fell 7.4 percent below a year ago.
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