A leading forward-looking indicator for the US home sales market has shown a further decline.
The National Association of Realtors’ Pending Home Sales Index tracks contract signings and declined 0.7% in July, the seventh consecutive monthly decline.
“Contract signings inched backward once again last month, as declines in the South and West weighed down on overall activity,” said NAR chief economist Lawrence Yun. “It’s evident in recent months that many of the most overheated real estate markets – especially those out West – are starting to see a slight decline in home sales and slower price growth.”
Inventory challenges continue to weigh on sales activity south of the border and with the stronger economy and job market driving demand, prices have faced considerable upward pressure.
That has meant buyers dropping out of the market as affordability has weakened.
Yun expects existing-home sales this year to decrease 1.0% to 5.46 million, and the national median existing-home price to increase around 5.0%. Looking ahead to next year, existing sales are forecast to increase 2% and home prices around 3.5%.
“Rising inventory levels – especially if new home construction finally starts picking up – should help slow price appreciation to around two-and-four percent, which will help aspiring first-time buyers, and be good for the long-term health of the nation’s housing market,” said Yun.