Hurricanes Harvey and Irma set to hit already falling sales in the US
Pending home sales in the United States fell in August for the fifth time in six months and slower activity is expected in the areas hit hard by Hurricanes Harvey and Irma, according to the latest index report.
Indeed, the lack of sales in hurricane hit locations is expected to pull existing sales for the year below the pace set in 2016, according to the National Association of Realtors.
Overall the index fell by retreated 2.6% to 106.3 in August from 109.1 in July, its lowest reading since January 2016 and it is 2.% below a year ago and has fallen on an annual basis in four of the past five months.
Lawrence Yun, NAR chief economist, explained that this summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year. ‘August was another month of declining contract activity because of the one, two punch of limited listings and home prices rising far above incomes,’ he said.
‘Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search,’ he added.
With little relief expected from the housing shortages that continue to plague several areas, Yun believes the housing market has essentially stalled. Further complicating any sales improvement in the months ahead is the fact that Hurricane Harvey’s damage to the Houston region contributed to the South’s decline in contract signings in August, and will likely continue to do so in the months ahead.
Furthermore, the temporary pause in activity in Florida this month in the wake of Hurricane Irma will slow overall sales even more in the South. Yun now forecasts that existing home sales will be down by around 0.2% overall by the end of 2017 year on year, down compared to the 3.8% in 2016.
However, the national median existing home price this year is expected to increase around 6%, up from the 5.2% recorded nationally in 2016.
‘The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year,’ Yun pointed out.
‘The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9%,’ he added.
A breakdown of the figures shows that sales in the Northeast fell 4.4% in August and are now 4.1% below a year ago. In the Midwest they fell by 1.5% and are 3.2% lower than August 2016.
Pending home sales in the South fell 3.5% and are 1.7% below last August while in the West they declined 1% and are 2.4% below a year ago.