Pending home sales fall for second straight month

Pending home sales fell in July, according to data released Monday by the National Association of Realtors (NAR), declining for the second consecutive month amid a record-breaking surge in housing prices.

NAR’s pending home sales index fell 1.8 percent in July after a 1.9 percent drop in June. Sales were down 8.5 percent on an annual basis from July, falling off as home prices continued to shatter records through the first half of 2021.

“The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers,” said Lawrence Yun, NAR’s chief economist. “That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months.”

Both home sales and prices skyrocketed through much of 2020 as the onset of the pandemic and government response to the crisis kicked off a buying boom. But that rush of home purchases depleted an already insufficient supply of homes, pricing out many potential buyers.

The median sale price for a single-family home rose to $390,500 and the average price reached $446,000 in July, according to federal data, each a new record. In the same month, new housing construction fell 7 percent as builders scrambled to catch up on backlogs that had accumulated throughout the pandemic.

“Homes listed for sale are still garnering great interest, but the multiple, frenzied offers — sometimes double-digit bids on one property — have dissipated in most regions,” Yun said. 

“Even in a somewhat calmer market, a number of potential buyers are still choosing to waive appraisals and inspections.”

A steady decline in home sales could eventually force sellers to reduce prices and give buyers more time and flexibility when purchasing homes. But affordable housing advocates have urged policymakers to take action to expand the supply of attainable homes, particularly after the COVID-19 pandemic left millions facing homelessness and financial peril.

The $3.5 trillion Democratic infrastructure, social services and climate plan is set to include billions of dollars meant to build public housing and encourage the private construction of cheaper homes. 

Republican lawmakers have ruled out supporting that package, which is intended to pass with only Democratic votes through the budget reconciliation process. But lawmakers in both parties have voiced support for zoning law reform measures that would make it easier to build affordable housing in areas that had previously excluded it through regulations.