On Wednesday, the National Association of Realtors (NAR) released its Pending Home Sales Index [1] (PHSI) for August, revealing an overall downgrade for the 2017 forecast.
The index, based on contract signings, fell 2.6 percent to 106.3 in August from 109.1 in July, making August the lowest reading since January 2016. According to the data, pending home sales has fallen on an annual basis in four of the past five months.
Lawrence Yun, Chief Economist of NAR said this summer’s low supply levels have officially drained all of the housing market’s momentum over the past year.
“August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” Yun said.
Yun continued to explain that the market has essentially stalled as, “demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”
According to the report, Yun now forecasts existing-home sales to close out the year at around 5.44 million, “which come in slightly below the pace set in 2016.”
Meanwhile, the national median existing-home price this year is expected to increase around 6 percent. In 2016, existing sales increased 3.8 percent and prices increased at 5.1 percent.
“The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year,” Yun added. “The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9 percent.”
View the full release by clicking here [2].