The Pending Home Sales Index decreased in July for the fourth time in five months, and now has decreased year-over-year in three of the past four months. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR), decreased 0.8% to 109.1 in July from a downwardly revised 110.0 in June, and fell 1.3% below a year ago.
The PHSI increased 0.6% in the West in July, but fell 0.3% in the Northeast, 0.7% in the Midwest and 1.7% in the South. Year-over-year, the PHSI increased 2.4% in the Northeast, but fell 0.2% in the South, 2.8% in the Midwest and 4.0% in the West.
NAR reported that although buyer traffic remains higher than a year ago, house hunters face limited options. While the median sales price increased 38% over the past five years, incomes have increased only 12%, putting pressure on affordability, especially for prospective first-time buyers. Existing sales declined in July, and new home sales also faltered, although they remain up 9.2% for the year. However builder confidence jumped up in August, suggesting that new residential construction will continue its upward trend and address the tight inventory of homes for sale.