• A monthly index measuring signed contracts to buy existing homes fell 2.6 percent in August compared to July.
• That is the fifth drop in the past six months and below expectations.
• A drop in supply and spike in home prices are largely to blame for the change, but two devastating hurricanes only added to the weakness.
Contracts to buy previously owned homes fell more than expected in August to their lowest level in about 1-1/2 years as the housing market continues to be sapped by a shortage of inventory that is also pushing up home prices. The National Association of Realtors’ index measuring signed contracts to buy existing homes fell 2.6 percent in August compared to July. Pending home contracts are viewed as a forward-looking indicator for the state of the housing market because they become sales one or two months later. Lawrence Yun, chief economist for the Realtors said in a release. “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.” He also stated, “August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes.” In the Western Region, sales declined 1.0 percent monthly and 2.4 percent annually.“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.” said Yun.