The National Association of Realtors (NAR) recently released an update on its Pending Home Sales Index (PHSI)—reporting the index is 3.5 percent below last year, and is now at its lowest reading since January 2015.
According to the report, activity declined annually both nationally and in all major regions.
PHSI in the South decreased 2.3 percent to an index of 115.9 in September—now 5 percent below last September, the report noted. However, index in the West increased 1.9 percent in September to 102.7, but is 2.9 percent below last year.
Northeast increased 1.2 percent to 94.5 in September, but is still 2.4 percent below a year ago. Similarly in the Midwest the index increased 1.4 percent to 102.9 in September, but remains 2.5 percent lower than September 2016.
NAR Chief Economist Lawrence Yun said the search to buy a home this fall continues to be a challenge for potential homeowners.
“Demand exceeds supply in most markets, which is keeping price growth high and essentially eliminating any savings buyers would realize from the decline in mortgage rates from earlier this year,” Yun 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.”
Yun continued to explain that the ongoing supply constraints continue to squeeze prospective buyers the most at the lower end of the market.
Last month, first-time buyers were 29 percent of all transactions, which matched the lowest share in exactly two years, according to Yun. Additionally, “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.”
“Buyers looking for a little relief from the stiff competition from over the summer may, unfortunately, be out of luck in the coming months,” Yun said. “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.”