Pending home sales surged in August after two months of decline
A sign for sale shows the home as being “under contract” in Washington, DC on November 19, 2020.
Saul Loeb | AFP | Getty Images
Contracts signed to buy existing homes rose 8.1% month-over-month in August, according to the National Association of Realtors, as buyers encountered higher inventories and slightly more favorable prices.
Analysts expected a monthly increase of 1%. Signings are still down 8.3% from August 2020.
August’s increase followed two months of decline, according to the NAR.
These so-called pending home sales are a future indicator of contracts signed in one to two months.
“Rising inventories and moderating pricing conditions are bringing buyers back into the market,” said Lawrence Yun, chief economist of NAR. “Affordability, however, remains difficult as the gains in house prices are about three times greater than the growth in wages.”
Home prices in July rose nearly 20% nationwide year over year, according to the latest S&P Case-Shiller Home Price Index, but that’s a three-month average going back to May . The increase in supply has lowered the number of bidding wars, according to realtors.
Sales increased the most in the cheaper regions, namely the Midwest and the South, reflecting how the shift to remote working in some industries has prompted buyers to relocate.
“The more moderately priced areas of the South and Midwest are seeing more signings of purchase contracts, which is not surprising,” said Yun. “This can be attributed to some employees who have the opportunity to work from anywhere because they choose to reside in more affordable locations.”
In the Midwest, sales increased 10.4% per month and were down 5.9% from August 2020. In the South, pending sales increased 8.6% per month and fell by 6.3% per year.
Sales in the West grew 7.2% per month and were down 9.2% from the previous year. Pending sales rose 4.6% in the Northeast on a month-over-month basis, but were down 15.8% from a year ago.