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After an August stalling, pending home sales in September ticked up 0.5 percent, according to the National Association of REALTORS® (NAR) Pending Home Sales Index (PHSI). Activity on an annual basis dipped 1 percent.
According to the Index, activity broke through in the Midwest and West, where, from August to September, the Index tracked up 1.2 percent and 4.5 percent, respectively. Compared to September 2017, however, the Index was lower, down 1.1 percent in the Midwest and 7.4 percent in the West.
Meanwhile, in the Northeast, the Index trickled down 0.4 percent from the month prior, and 2.7 percent below its level in September 2017. In the South, the Index tumbled 1.4 percent from the month prior, but was 3.3 percent above last year’s reading.
“This shows that buyers are out there on the sidelines, waiting to jump in once more inventory becomes available and the price is right,” says Lawrence Yun, chief economist at NAR. “When compared to the year 2000, when the housing market was considered very healthy, home sales figures were roughly equivalent and the affordability conditions were much lower compared to now. So even though affordability has been falling recently, the demand for housing should remain steady.
“The general condition of the economy is excellent; it simply has not lifted home sales this year,” Yun says. “Home prices are still rising, so people who are purchasing are still seeing wealth gains. Excluding periods of subprime lending, homeownership has consistently led to wealth gains. If people are willing to purchase a home within their budget, they will likely continue to accumulate equity.”