Pending home sales advance in August

The National Association of Realtors reported today that the Pending Home Sales Index (PHSI) increased 8.1% to 119.5 in August. 

Year-over-year, signings dipped 8.3%. An index of 100 is equal to the level of contract activity in 2001. The index is a forward-looking indicator of homes sales based on contract signings.

“Rising inventory and moderating price conditions are bringing buyers back to the market,” said Lawrence Yun, NAR’s chief economist. “Affordability, however, remains challenging as home price gains are roughly three times wage growth.”

But an imbalance in the market is unsustainable over the long term, according to Yun.

“The more moderately priced regions of the South and Midwest are experiencing stronger signing of contracts to buy, which is not surprising,” Yun continued. “This can be attributed to some employees who have the flexibility to work from anywhere, as they choose to reside in more affordable places.”

The Realtor.com Hottest Housing Markets data indicated revealed that out of the largest 40 metros, the most improved metros over the past year, as of Sept. 27, were Orlando-Kissimmee-Sanford, Fla.; Tampa-St. Petersburg-Clearwater, Fla.; Nashville-Davidson-Murfreesboro-Franklin, Tenn.; Jacksonville, Fla.; and Austin-Round Rock, Texas.

Here’s how pending home sales break down by region:

• Month-over-month, the Northeast PHSI rose 4.6% to 96.2 in August, a 15.8% drop from a year ago. 
• In the Midwest, the index climbed 10.4% to 115.4 last month, down 5.9% from August 2020.
• Pending home sales transactions in the South increased 8.6% to an index of 141.8 in August, down 6.3% from August 2020. 
• The index in the West grew 7.2% in August to 107.0, however still down 9.2% from a year prior.