National Association of Realtors chief economist Lawrence Yun said that that buyer demand continues to outpace the supply of homes for sale and prices are continuing to rise in a number of markets. “Pending sales have leveled off since mid-summer, with buyers being bounded by rising prices and few available and affordable properties within their budget,” he said. “Even with existing-housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago.”
Bloomberg commented that, “Existing home sales are being limited by lack of homes on the market which itself, however, reflects softness in home prices and general demand. But there is strength in housing and that’s innew home sales and construction.”
According to Yun, sales in the coming months should be able to roughly maintain their current pace. However, he warns that there are looming speed bumps that have the potential to impact housing.? “The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being,” he said. “Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales.”
Sales fell in three of the four regions with only the West posting a slight gain of 1.8 percent in August to 104.9, putting it 7.6 percent above a year ago. The PHSI in the Northeast fell 5.6 percent to 93.3 but remains 8.9 percent higher year-over-year.? In the Midwest the index inched down 0.4 percent to 107.4 and is now 6.5 percent above August 2014. Pending home sales in the South declined 2.2 percent to an index of 121.5 and was 4.1 percent higher than during the same period last year.
The national median existing-home price is expected to increase 5.8 percent in 2015 to $220,300. Yun forecasts total existing-home sales this year to increase 7.0 percent to around 5.28 million, about 25 percent below the prior peak set in 2005 (7.08 million).
A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. The PHSI is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.