Pending Home Sales Show Slight Improvement in August

Overview of Pending Home Sales

Despite a drop in mortgage rates and a surge in mortgage applications, the growth of pending home sales in the US was minimal in August. The increase was only 0.6% month over month (MoM), which was less than the expected 1.0% MoM rebound following the 5.5% decrease in July. According to data, pending home sales were down 4.3% year over year (YoY) and have not shown a positive YoY growth since November 2021. This slight increase in August has nudged the pending home sales index up from its all-time record lows.

Comments from NAR Chief Economist

NAR Chief Economist Lawrence Yun commented on the situation, stating that the slight upward trend reflects a modest improvement in housing affordability, primarily due to the decrease in mortgage rates to 6.5% in August. However, he also noted that contract signings remain near cyclical lows, even as home prices continue to reach new record highs.

Regional Breakdown of Pending Home Sales

The data shows a regional variation in the trend of pending home sales. While sales rose in the Midwest, South, and West, the Northeast index fell to its lowest point since the start of the pandemic in 2020. Pending home sales are often seen as a leading indicator for previously owned homes, as houses typically go under contract a month or two before they are sold.

Bottom Line

The slight increase in pending home sales in August, despite falling short of expectations, indicates a small improvement in housing affordability. However, with contract signings remaining near cyclical lows and home prices continuing to reach new record highs, the housing market still faces significant challenges. What are your thoughts on this trend in the housing market? Do you think the situation will improve in the coming months? Share this article with your friends and let us know your views. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.