U.S. pending home sales fall for second straight month in July

(Reuters) – Contracts to buy previously owned US homes fell for the second straight month in July, in line with limited supply that failed to keep up with demand from potential home buyers.

The National Association of Realtors (NAR) said Monday that the Pending Home Sales Index, based on contracts signed last month, fell 1.8% after a revised 2.0% in June. Economists polled by Reuters had predicted a 0.4% increase in pending home sales.

Current housing contracts are seen as a forward-looking indicator of the health of the housing market, as they sell one to two months later.

The market may begin to cool slightly, but right now there isn’t enough supply to meet the demand of potential buyers, Lawrence Yun, NAR’s chief economist, said in a statement. The stock is slowly increasing and home shoppers should start seeing more options in the coming months.

Home prices across the country have largely risen due to limited supply, with the median price for new single-family homes now being $390,000 and for existing homes just under $360,000.

Compared to a year ago, home sales pending a home fell by 8.5%.

The highly competitive real estate market we saw in the first six months of 2021 pushed available inventory to record lows and pushed prices to new heights just as summer arrived, frustrating many new buyers, said George Ratiu, manager of economic research for real estate agent.com. However, in a noticeable shift, homeowners responded to market trends and began to advertise homes in greater numbers.

Only the West region recorded a month-over-month increase in contract activity in July, while the Midwest, Northeast and South all reported declines. In all four regions, the number of transactions decreased year on year.

Homes for sale still get a lot of interest, but the multiple, outrageous offers that sometimes offer double-digit bids on a single home have disappeared in most regions, Yun said. Even in a somewhat quieter market, a number of potential buyers still choose to forgo appraisals and inspections.

Existing home sales rose for the second month in a row in July as inventories improved moderately.

New home sales also rose last month, but this followed three consecutive months of declines.