Despite the demand for limited homes persisting, signs of a market cooldown continued in July, according to the latest report from the National Association of REALTORS® (NAR).
NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, showed a 1.8% decline last month, falling to 110.7. The West was the only region to record a month-over-month increase.
All regions saw year-over-year contract signings fall last month, declining 8.5% nationally.
Despite two consecutive months of dipping contract signing, experts at NAR say buyers are still doing everything they can to get into a house. According to the report, 27% of buyers bypassed appraisal and inspection contingencies in July.
Regional Breakdown:
Northeast
-6.6% MoM — Now 92.0 PHSI
-16.9% YoY
Midwest
-3.3% MoM — 104.6 PHSI
-8.5% YoY
South
-0.9% MoM — 130.9 PHSI
-6.7% YoY
West
+1.9% MoM — 99.8 PHSI
-5.7% YoY
What the industry is saying:
“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. That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months.
“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. Even in a somewhat calmer market, a number of potential buyers are still choosing to waive appraisals and inspections.” — Lawrence Yun, NAR Chief Economist
“Contract signings advanced in July, as a 20 basis point drop in mortgage rates emboldened summer homebuyers to make offers on a growing number of new listings. Many Americans mixed their summer vacation travels with real estate shopping, while hybrid and remote work continued to open up new geographic areas to homebuyers seeking affordability and quality of life further from crowded, expensive downtown areas.
“In a typical year, Summer represents the peak period of homebuying activity, especially for families who want to be settled in a new school district before the next academic year begins. The highly competitive real estate market we saw in the first six months of 2021 squeezed available inventory to record-lows and pushed prices to new highs just as summer emerged, leaving many first-time buyers feeling frustrated.
“However, in a noticeable shift, homeowners responded to market trends and started listing homes in larger numbers. realtor.com®’s weekly data has seen more new listings in 19 of the last 22 weeks, compared with the same period in 2020. Prices are reflecting the influx of supply, growing at a tamer 8.6% year-over-year rate, compared with the double-digit gains of this past year. With mortgage rates still under 3.0%, first-time buyers can look forward to a fall season with more affordable house options.” — George Ratiu, realtor.com® Chief Economist
For more information, please visit www.nar.realtor.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.
