Pending Home Sales Decline for Second Straight Month

by Peter Thomas Ricci

Housing continues to slow in 2015


Pending home sales were down 2.3 percent from August to September, according to the latest report from the National Association of Realtors.

Closing out the month at 106.8, the Pending Home Sales Index (PHSI), NAR’s forward-looking indicator of contract signings, was still up 3.0 percent from Sept. 2014’s 103.7; however, pending sales are now at their second lowest level of 2015.

Pending Home Sales in September

Pending sales were down across the country, though by differing amounts:

  • In the Northeast, the PHSI was down 4.0 percent monthly to 89.6, but remained ahead 3.9 percent from a year ago.
  • The Midwest PHSI, meanwhile, declined 2.5 percent monthly to 104.7, but increased 4.3 percent yearly.
  • In the South, pending sales were down 2.6 percent from August and 0.1 percent from Sept. 2014, with a PHSI of 118.3.
  • And finally, in the West, the PHSI of 104.4 was down 0.2 percent monthly but up 6.6 percent yearly.

Unequal Performance Harms Housing

Lawrence Yun, NAR’s chief economist, emphasized the spotty nature of housing demand in his comments, which accompanied the association’s report.

“There continues to be a dearth of available listings in the lower end of the market for first–time buyers,” Yun said. “Realtors in many areas are reporting stronger competition than what’s normal this time of year because of stubbornly–low inventory conditions.”

Indeed, NAR’s own existing-home sales report for September plainly revealed that discrepancy. While homes priced $100,000 and below saw sales drop 4.8 percent a year ago, homes priced $250,000-$500,000 saw sales soar by 21.9 percent; similarly, sales of homes priced $750,000 to $1 million rose 23.4 percent, and sales of homes priced $1 million and above rose 18.8 percent.

Such a development is hardly surprising – for the last year, we have steadily reported on how inequality and fundamental economic problems are impacting housing, both in existing homes and new construction – but until now, pending home sales had increased at a steady clip.

One month’s home sales hardly suggest a trend, and Yun also expressed confidence that the recent, dour economic forecasts would not impact housing; still, it will be interesting to see if September’s pending sales are a sign of mere seasonal weakness or something longer reaching.

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