Florida Real Estate News –
NAR: Pending sales drop 2.6% in Aug.
WASHINGTON – Pending home sales sank in August for the fifth time in six months – and slower activity in the areas hit hard by Hurricanes Harvey and Irma will now likely pull existing sales for the year below the pace set in 2016, according to the National Association of Realtors® (NAR).
NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, retreated 2.6 percent to 106.3 in August from 109.1 in July. The index is now at its lowest reading since January 2016 (106.1) and down 2.6 percent year-to-year. It has fallen on an annual basis in four of the past five months.
This summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year, according to Lawrence Yun, NAR chief economist.
“August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” Yun says. “Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”
With little relief expected from the housing shortages that continue to plague several areas, Yun believes the housing market has essentially stalled.
Further complicating any sales improvement in the months ahead is the fact that Hurricane Harvey’s damage to the Houston region contributed to the South’s decline in contract signings in August, and will likely continue to lower pending sales in the months ahead.
Furthermore, the temporary pause in activity in Florida this month in the wake of Hurricane Irma will slow overall sales even more in the South, which should be reflected in future pending home sale reports.
Yun now forecasts that existing-home sales will close out the year at around 5.44 million, which comes in slightly below (0.2 percent) the pace set in 2016 (5.45 million). The national median existing-home price this year is expected to increase around 6 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent.
“The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year,” says Yun. “The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9 percent.”
The pending sales index in the Northeast fell 4.4 percent to 93.4 in August, and it’s now 4.1 percent below a year ago. In the Midwest, the index decreased 1.5 percent to 101.8 in August and is now 3.2 percent lower than August 2016.
Pending home sales in the South retreated 3.5 percent to an index of 118.8 in August and they’re now 1.7 percent below last August. The index in the West declined 1.0 percent in August to 101.3, and is 2.4 percent below a year ago.
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