Pending sales stay flat in September
Pending sales activity on existing homes in the United States remained unchanged from the previous month in September. However, it also marked the fifth time in the previous six months that pending sales have fallen from the previous year.
In the latest update of its Pending Home Sales Index, the National Association of Realtors said the figure for September was 106. This was unchanged from the downwardly revised index for August but down 3.5 percent from September 2015, reaching its lowest reading since a figure of 104.7 in January 2015.
The Pending Home Sales Index is a measure of transactions where a contract has been signed but the sale has not been finalized. Since this usually takes place within two months, the index is used as a forward-looking indicator of existing home sales activity.
An index of 100 is equal to the average pending sales activity in 2001, the first year this activity was measured. Existing home sales in that year were between 5 million and 5.5 million, which is considered normal for the current U.S. population.
Lawrence Yun, chief economist of the National Association of Realtors, said a continuing shortage of available homes for sale is contributing to the slower pace of sales. He said the reduced inventory is helping to boost home prices, which can offset the savings buyers realize through historically low mortgage rates.
"While most of the country, except 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," said Yun.
Yun said recent hurricanes have also had an impact on the real estate market, but that the Houston market has already seen a significant rebound in activity after suffering serious damage from Hurricane Harvey in late August. He said he expects to see similar recovery in Florida, which was hit by Hurricane Irma in September.
According to data from the National Association of Realtors, existing home sales in September that sold for less than $100,000 were down 17 percent from the previous year while sales in the $100,000 to $250,000 range fell by 5.9 percent. The share of first-time buyers fell to 29 percent in this month, the lowest share in two years.
"Buyers looking for a little relief from the stiff competition from over the summer may unfortunately be out of luck in the coming months," said Yun. "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."
In the Northeast, the Pending Home Sales Index increased 1.2 percent from August to 94.5; this remained 2.4 percent below the index of September 2016. The index for the Midwest grew 1.4 percent from the previous month to 102.9, but was down 2.5 percent from the previous year.
The South was the only region to have a decrease in pending sales from both the previous month and previous year, falling 2.3 percent from August and 5 percent from September 2016 to 115.9. In the West, the index of 102.7 marked a 1.9 percent increase from the previous month and 2.9 percent decrease from the previous year.
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