Pending home sales were unchanged in September, but activity declined on an annual basis both nationally and in all major regions, the latest index shows.
The pending home sales index published by the National Association of Realtors (NAR) is now at its lowest since January 2015 and down 3.5% compared to a year ago having fallen on an annual basis in five of the last six months.
According to Lawrence Yun, NAR chief economist, the main problem that buying a home has become more challenging due to a chronic lack of supply with demand exceeding the number of properties for sale in most locations.
‘Demand exceeds supply in most markets, which is keeping price growth high and essentially eliminating any savings buyers would realise from the decline in mortgage rates from earlier this year,’ he said.
‘While most of the country, except for the South, did see minor gains in contract signings last month, activity is falling further behind last year’s pace because new listings aren’t keeping up with what’s being sold,’ he pointed out.
He explained that while hurricane Irma’s direct hit on Florida weighed on activity in the South, similar to the way Houston has rebounded after hurricane Harvey, Florida’s strong job and population growth should guide sales back to their pre-storm pace fairly quickly.
As has been the case most of the year, Yun said that the ongoing supply constraints continue to squeeze prospective buyers the most at the lower end of the market. Last month, first time buyers accounted for just 29% of all sales which matched the lowest share in exactly two years.
Furthermore, existing sales were down notably on an annual basis in the price range below $250,000, but up solidly the higher up the price bracket and Yun added that buyers looking for a little relief from the stiff competition from over the summer may unfortunately be out of luck in the coming months as usually inventory starts to decline heading into the winter, and many would-be buyers from earlier in the year are still on the hunt to find a home.
A breakdown of the index figures show that sales increased by 1.2% in September in the North East but are still 2.4% below a year ago while in the Midwest they rose 1.4% but are 2.5% lower than September 2016. Pending home sales in the South decreased 2.3% and are now 5% below last September and while they increased by 1.9% in the West, they are still 2.9% below a year ago.
