Pending home sales see a 2.5 percent decline in July
After back-to-back months of gains, July pending-home sales dropped 2.5 percent to 105.6, down from June’s 108.3. “Super-low mortgage rates have not yet consistently pulled buyers back into the market,” explains Lawrence Yun, National Association of Realtors (NAR) chief economist. “Economic uncertainty is no doubt holding back some potential demand, but what is desperately needed is more supply of moderately priced homes.”
What lies ahead
With increasing trade tensions, growth predictions are somewhat uncertain, but Yun foresees GDP growth to ease to 2.0 percent in 2019 and 1.6 percent in 2020, explaining that slower economic growth will keep interest rates low. This should bring home sales a short-term boost, though the level of sales in the first seven months of the year forecast existing-home sales to fall flat at approximately 5.34 million in 2019. With tight inventory conditions, experts anticipate existing-home sales to continue to increase, but at a slower pace of 4 percent in 2019 to $269,000 and 3 percent in 2020 to $278,500.
A call for construction
Yun outlines the need for an increase in supply. “A boost to home building would greatly improve economic growth,” he explains. “More free-market prices on construction materials without government interference about where homebuilders have to get their supply will also help produce more and grow the economy. The housing industry cannot grow without more supply.”
All four major regions see a decrease in contract activity
Pending-home sales in the Northeast and the Midwest reported a decline both from last month and last year, while the South and West declined in July but saw a slight increase from last year’s numbers. The Northeast fell 1.6 percent to 93.0 in July, down 0.9 percent from 2018; the Midwest dropped 2.5 percent to 101.0 in July, down 1.2 percent from last year; the South decreased 2.4 percent to 122.7 in July—up 0.1 percent from 2018, and the West decreased 3.4 percent in July to 93.5—a 0.3 percent increase from 2018.