Pending home sales slip in July

Pending home sales declined for the second consecutive month, the National Association of Realtors (NAR) reported.

The Pending Home Sales Index (PHSI) declined 1.8% to 110.7 in July. Year-over-year, signings fell 8.5%. An index of 100 is equal to the level of contract activity in 2001. The index is a forward-looking indicator of home sales based on contract signings.

“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.”

But heavy buyer demand continues to drive up prices.

“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.”

As of July, 27% of buyers bypassed appraisal and inspection contingencies. By refraining from these evaluations, in most cases, buyers are looking to accelerate the homebuying process, according to Yun.

Here’s how pending home sales performed by region:

• Month-over-month, the Northeast PHSI fell 6.6% to 92.0 in July, a 16.9% decrease from a year ago.
•  In the Midwest, the index dropped 3.3% to 104.6 last month, down 8.5% from July 2020.
• Pending home sales transactions in the South declined 0.9% to an index of 130.9 in July, down 6.7% from July 2020. 
• The index in the West rose 1.9% in July to 99.8, but still down 5.7% from a year prior.