Pending home sales cooled in August after rebounding in July as low inventory continues to hamper the housing market’s steady expansion.
The number of sales, a forward-looking indicator based on contract signings, declined 2.4 percent, to 108.5, last month from 111.2 in July and is slightly lower than last year’s level, the National Association of Realtors (NAR) reported on Thursday.
{mosads}Only the Northeast saw an increase in contract signings.
“Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract,” said Lawrence Yun, NAR chief economist.
“In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings,” Yun said.
With last month’s decline, the index is now at its second lowest reading this year after January’s 105.4.
Yun said evidence is piling up that the construction of new homes is crucial to keeping momentum building behind the housing recovery.
Housing inventory has declined year-over-year for 15 straight months, and there are concerns that a lack of inventory will push up prices through the end of the year.
“There will be an expected seasonal decline in new listings in coming months, which could accelerate price appreciation and make finding an affordable home even more of a struggle for would-be buyers,” Yun said.
Earlier this month, NAR released a new study that showed single-family home construction is not keeping pace with job creation.
“Given the current conditions, there’s not much room for sales to march again towards June’s peak cyclical sales pace,” Yun said.
But sales are still expected to exceed last year’s levels.
Existing-home sales this year should total around 5.36 million, a 2.1 percent increase from 2015 and the highest annual pace since 2006’s 6.48 million.
The national median existing-home price growth is forecast this year to rise around 4 percent.
Regionally, sales in the Northeast rose 1.3 percent.
In the Midwest, sales decreased 0.9 percent; they were down 3.2 percent in the South and 5.3 percent in the West.