The decline was not substantial, but pending contracts definitely slowed down in August.
Pending home sales fell 1.0 percent in from July to August, and are down 2.2 percent from where they were in 2013.
Those were the main findings of the latest Pending Home Sales Index, a forward-looking measurement of contract activity from the National Association of Realtors. Though pending sales were down, NAR noted that the index remained above 100 at 105.8, which denotes an average level of contract activity; that’s the fourth straight month that the index has remained above 100.
Pending Home Sales Slip in August
Lawrence Yun, NAR’s chief economist, said that the fall of distressed home sales is to blame for August’s disappointing contract activity, though less distressed sales is certainly not a bad thing.
“Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month,” Yun said. “With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”
Regionally, the West was the one area where pending sales rose, with them jumping 2.6 percent; otherwise, contract activity was down across the board, falling 3.0 percent in the Northeast, 2.1 percent in the Midwest and 1.4 percent in the South.
Based on contract activity through August, NAR anticipates existing-home sales to drop 3.0 percent this year, though median price will still rise between 5 and 6 percent.
Interested in how the Pending Home Sales Index has charted the last 10 years? Check out our graph below, which follows the index from 2004 through August of this year. Two things to note: the strange jump in 2009 and 2010 was due to the homebuyer tax credit; and the steep drop in 2013 was due to the rising mortgage rates of that year.