More house hunters are looking for a home, but they’re having trouble finding one. Demand continues to exceed housing supplies in many markets, which is restraining contract signings this fall, the National Association of REALTORS® reported Thursday.
NAR’s Pending Home Sales Index—a forward-looking indicator based on contract signings—posted a reading of 106 in September, its lowest reading since January 2015. The index is also 3.5 percent below a year ago and has fallen on an annual basis in five of the past six months.
“Demand exceeds supply in most markets, which is keeping price growth high and essentially eliminating any savings buyers would realize from the decline in mortgage rates from earlier this year,” says Lawrence Yun, NAR’s chief economist. “While most of the country, except for the South, did see minor gains in contract signings last month, activity is falling further behind last year’s pace because new listings aren’t keeping up with what’s being sold.”
Recent hurricanes also continue to weigh on sales. “Hurricane Irma’s direct hit on Florida weighed on activity in the South, but similar to how Houston has rebounded after Hurricane Harvey, Florida’s strong job and population growth should guide sales back to their pre-storm pace fairly quickly,” Yun says.
Ongoing supply constraints are squeezing prospective buyers the most at the lower end of the market, Yun says. First-time buyers accounted for 29 percent of all transactions in September, which matched the lowest share in two years. Existing-home sales continue to be down on an annual basis in the price range below $250,000. However, sales remain higher in the upper price brackets, NAR notes.
“Buyers looking for a little relief from the stiff competition from over the summer may unfortunately be out of luck in the coming months,” Yun says. “Inventory starts to decline heading into the winter, and many would-be buyers from earlier in the year are still on the hunt to find a home.”
Source: National Association of REALTORS®
