Pending home sales in the United States have fallen for a seventh month in a row and are down by 2.3% year on year, the latest data from estate agent shows.
The monthly fall of 0.7% was led by declines in the South and West and many of the overheated markets are seeing a fall in sales and slower price growth, according to the latest index report from the National Association of Realtors.
‘The reason sales are falling off last year’s pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it,’ said Lawrence Yun, NAR chief economist.
He explained that increasing inventory in several large metro areas, and especially many in the West, will likely help cool price growth to more affordable levels going forward. Denver, Santa Rosa, California, San Jose-Sunnyvale-Santa Clara, California, Seattle, Nashville, Tennessee, and Portland, Oregon are among the large markets seeing a rise in active listings in July compared to a year ago.
‘Rising inventory levels, especially if new home construction finally starts picking up, should help slow price appreciation to around 2% to 4% which will help aspiring first time buyers, and be good for the long term health of the nation’s housing market,’ said Yun.
He expects existing home sales this year to decrease 1% and the national median existing home price to increase around 5%. Looking ahead to next year, existing sales are forecast to increase 2% and home prices around 3.5%.
A breakdown of the figures show that sales increased by 1% in the North East in July but are still 2.3% below a year ago. In the Midwest they inched up 0.3% but are still 1.5% lower than July 2017.
Pending home sales in the South fell by 1.7% and are 0.9% below a year ago while in the West they decreased 0.9% and are 5.8% below a year ago.
