In a sign of more homebuyers revealing their willingness to get their feet wet in the market, pending home sales in August rose by 4 percent month over month and 3.8 percent year over year, the National Association of Realtors reported on Monday.
Pending home sales, an indicator of future home sales based on contract signings, rose in all major regions of the country on an annual basis and in all regions but the Northeast on a month over month basis.
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Lawrence Yun
Lowering mortgage rates are finally giving homebuyers the confidence they need to shop in a more serious way, NAR Chief Economist Lawrence Yun said.
“Lower mortgage rates are enabling more homebuyers to go under contract,” Yun said in a statement. “In the Midwest, low mortgage rates combined with high levels of affordability are attracting more buyers compared to other regions.”
Realtors are also feeling more confident in response to the positive data, NAR said, with 19 percent of NAR members anticipating an increase in buyer traffic in the next three months, up from 16 percent the previous month and unchanged from one year ago. The same share of NAR members expect seller numbers to increase, which is down from 21 percent in July, but up from 18 percent one year ago.
The Midwest saw the strongest rise in pending home sales, which were up 8.7 percent month over month and 6.7 percent year over year. In the South, pending home sales were up 3.1 percent on a monthly basis and 4.2 percent on an annual basis. They rose 5 percent month over month in the West and just 0.2 percent year over year. Meanwhile, pending home sales declined 1.1 percent month over month in the Northeast and rose 2.6 percent on an annual basis.
Dr. Lisa Sturtevant
Although pending home sales rose last month, Bright MLS Chief Economist Dr. Lisa Sturtevant noted that they are still low compared to other recent years, with buyers still waiting for increased affordability and sellers taking their homes off the market in discouragement. All that is to say, the outlook for fall may not be quite so sunny.
“In addition to lower mortgage rates, buyers in August also benefited from more inventory on the market,” Dr. Sturtevant said in a statement emailed to Inman. “But it is possible that inventory could actually shrink this fall, and that is another reason why we should expect a slow fall housing market. A recent analysis by Bright MLS has shown an increase in the number of sellers who are pulling their homes off the market. The uptick in delisting activity reflects the transitioning housing market, as would-be sellers take their home off the market when they are not getting offers at the price they had hoped for.”
