Pending home sales have decreased on an annual basis for eight consecutive months, and have declined month over month in four of the past five months. The Pending Home Sales Index decreased 1.8% in August, and is now down 2.3% year over year. The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR). The PHSI decreased to 104.2 in August, from 106.1 in July.
The PHSI decreased in all four regions, ranging from a 5.9% decrease in the West to 0.5% in the Midwest. Year-over-year, the PHSI increased by 1.3% in the South, but decreased 11.3% in the West, 1.6% in the Northeast and 1.1% in the Midwest.
NAR attributes the slowdown to the chronically low inventory, and the slowdown in existing sales mirrors the summer soft patch in new home sales. However, NAR reported a record high number of Americans now believe it is a good time to sell. Despite flat existing sales, builder confidence remained firm in September. The accelerating economic growth in the second quarter of 2018 fueled the job market, and the demand for new residential construction will continue to grow.