Pending home sales recovered in August, recording gains after two prior months of declines, according to the National Association of Realtors (NAR). The Pending Home Sales Index (PHSI) increased 8.1% to 119.5, and contract signings dipped 8.3% year over year.
“Rising inventory and moderating price conditions are bringing buyers back to the market,” says Lawrence Yun, NAR’s chief economist. “Affordability, however, remains challenging as home price gains are roughly three times wage growth.”
Such an imbalance in the market is unsustainable over the long term, according to Yun.
“The more moderately priced regions of the South and Midwest are experiencing stronger signing of contracts to buy, which is not surprising,” continues Yun. “This can be attributed to some employees who have the flexibility to work from anywhere, as they choose to reside in more affordable places.”
Each of the four major U.S. regions mounted month-over-month growth in contract activity. However, those same areas reported decreases in transactions year over year, with the Northeast being hit hardest, enduring a double-digit drop.
The Northeast PHSI rose 4.6% to 96.2 in August, a 15.8% drop from a year ago. In the Midwest, the index climbed 10.4% to 115.4 last month, down 5.9% from August 2020. Sales transactions in the South increased 8.6% to an index of 141.8, down 6.3% from August 2020. The index in the West grew 7.2% in August to 107, however still down 9.2% from a year prior.
