14 West Hawaii Real Estate | October 12, 2018
Pending home sales dip 1.8 percent in August
Pending home sales fell slightly
in August and have now
decreased on an annual basis
for eight straight months,
according to the National Association
of Realtors.
The Pending Home Sales Index,
a forward-looking indicator based
on contract signings, decreased 1.8
percent to 104.2 in August from 106.1
in July. With last month’s decline,
contract signings are now down 2.3
percent year-over-year.
Lawrence Yun, NAR chief economist,
says that low inventory continues
to contribute to the housing market
slowdown. “Pending home sales
continued a slow drip downward, with
the fourth month over month decline
in the past five months,” he said.
“Contract signings also fell backward
again last month, as declines in the
West negatively impacted overall
activity,” he said. “The greatest decline
occurred in the West region where
prices have shot up significantly, which
clearly indicates that affordability
is hindering buyers and those
affordability issues come from lack
of inventory, particularly in moderate
price points.”
According to the third quarter
Housing Opportunities and Market
Experience (HOME) survey, a record
high number of Americans believe
now is a good time to sell. “Just a
couple of years ago about 55 percent
of consumers indicated it was a good
time to sell; that figure has climbed
close to 77 percent today.”
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Added Yun, “With prices
having risen so quickly, many
consumers were deciding
to wait to list their homes
hoping to see additional price
and equity gains. However,
with indications that buyers
are beginning to pull out,
price gains are going to
decelerate and potential
sellers are considering that
now is a good time to list and
bring more properties to the
market.”
Yun pointed to year-overyear
increases in active listings
from data at realtor.com to
illustrate a potential rise in
inventory. Columbus, Ohio,
Seattle-Tacoma-Bellevue,
Wash., San Diego-Carlsbad,
“The greatest decline occurred in the West region where prices have shot up
significantly, which clearly indicates that affordability is hindering buyers and
those affordability issues come from lack of inventory, particularly in moderate
price points.”
Calif., Providence-Warwick,
RI-Mass. and Nashville, Tenn.
saw the largest increase
in active listings in August
compared to a year ago.
When it comes to rising
mortgage rates, Yun believes
that while rising rates
are always a deterrent to
potential buyers, it should not lead
to a significant decline. “We have
two opposing factors affecting the
market: the negative impact of rising
mortgage rates and the positive impact
of continued job creation. This should
lead to future homes sales staying fairly
neutral,” said Yun. “As long as there is
job growth, rising mortgage rates will
hinder some buyers; but job creation
means second or third incomes being
added to households which gives
consumers the financial confidence to
go out and make a home purchase.”
Yun expects existing-home sales
this year to decrease 1.6 percent to
5.46 million, and the national median
existing-home price to increase 4.8
percent. Looking ahead to next year,
existing sales are forecast to rise 2
percent and home prices around 3.5
percent.
August Pending Home Sales
Regional Breakdown
The PHSI in the Northeast dropped
1.3 percent to 92.7 in August, and is
now 1.6 percent below a year ago. In
the Midwest, the index slid back 0.5
percent to 101.6 in August and is also
1.1 percent lower than August 2017.
Pending home sales in the
South dipped 0.7 percent to
an index of 121.3 in August,
however, that number is 1.3
percent higher than a year
ago. The index in the West
decreased 5.9 percent in
August to 89.1 and plummeted
11.3 percent below a year ago.
The National Association of Realtors
is America’s largest trade association,
representing 1.3 million members
involved in all aspects of the residential
and commercial real estate industries.
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