Following the tumble in new- and existing-home sales in August (after Q2’s bounce), Pending Home Sales confirmed weakness, dropping 2.4% MoM (against expectations of no change) to 7-month lows. Despite homebuilder sentiment soaring to post-crisis highs, it appears the Summer bounce is dead and the so-called US housing recovery is rolling over. NAR’s Lawrence Yun blames “steeper home prices” and “lack of inventory,” and warns “evidence is piling up that without more new home construction the current housing recovery could stall.”
Pending Home Sales dropped to the lowest since January…
As Bloomberg notes, the fall in contract signings was the third in four months, adding to signs that a relative paucity of available homes is holding back the market. Recent data have shown that new U.S. home construction fell more than projected in August, while home prices are rising at a solid pace. Borrowing costs remain near historic lows while jobs and wages are gaining, factors that will continue to support housing.
Lawrence Yun, NAR chief economist, says suffering supply levels have taken the wind out of the momentum the housing market experienced earlier this year.
“Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract,” he said.
“In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings.”
According to Yun, evidence is piling up that without more new home construction the current housing recovery could stall. Housing inventory has declined year-over-year for 15 straight months; properties in August typically sold 11 days quicker than in August 20151 and after increasing 5.1 percent last month, existing-home prices have risen year-over-year for 54 consecutive months.
“There will be an expected seasonal decline in new listings in coming months, which could accelerate price appreciation and make finding an affordable home even more of a struggle for would-be buyers,” added Yun.
Charts: Bloomberg
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