Pending home sales see slight improvement

Pending home sales inched ahead by 0.9% in July, the National Association of Realtors reported this morning.

This marks the second consecutive month pending home sales have shown growth.

The Pending Home Sales Index (PHSI) edged forward to 77.6 in July. But on a year-over-year basis, pending home sales are down 14% compared to July 2022. The PHSI is a forward-looking indicator of home sales based on contract signings.

“The small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple home-buying offers,” said NAR Chief Economist Lawrence Yun. “Jobs are being added and, thereby, enlarging the pool of prospective home buyers. However, rising mortgage rates and limited inventory have temporarily hindered the possibility of buying for many.”

The same factors had a big impact on existing-home, which fell nearly 17% in July. 

Conversely, the limited pool of existing homes on the market continue to drive buyers toward new home purchases. New home sales moved ahead 4.4% last month to a seasonally adjusted annual rate of 714,000.

Here’s how pending home sales performed on a regional basis:

• The Northeast PHSI shrank 5.8% from last month to 63.2, a decrease of 20.2% from July 2022. 
• The Midwest index fell 0.4% to 77.5 in July, down 16.0% from one year ago.
• The South PHSI lifted 2.0% to 95.3 in July, declining 10.9% from the prior year. 
• The West index improved 6.2% in July to 61.3, dropping 12.8% from July 2022.

“Interestingly, the West region experienced a meaningful price decline in the past year and buyers are quickly returning as a result,” Yun added.