Pending home sales increased slightly in September, with significant gains in the West and Midwest offsetting more modest growth in other regions, the National Association of REALTORS® reports. NAR’s Pending Home Sales Index, a forward-looking measure based on contract signings, shows signings inched up 0.5 percent nationwide to a reading of 104.6 in September. But on a year-over-year basis, contract signings have dropped 1 percent—marking the ninth consecutive month of annual decreases.
NAR Chief Economist Lawrence Yun says the housing market is stabilizing. “This shows that buyers are out there on the sidelines, waiting to jump in once more inventory becomes available and the price is right,” he says.
Lower affordability and a lack of moderately priced homes on the market are the two main factors putting a strain on sales, Yun says. Still, affordability is much more favorable when compared to the past few decades. “When compared to the year 2000—when the housing market was considered very healthy and home sales figures were roughly equivalent—the affordability conditions were much lower compared to now,” Yun says. “So even though affordability has been falling recently, the demand for housing should remain steady.”
Yun also believes the housing market will soon reflect the overall health of the economy. “The general condition of the economy is excellent, but it simply has not lifted home sales this year,” Yun says. “Home prices are still rising, so people who are purchasing are still seeing wealth gains.”
Many markets are seeing an increase in inventories, which is opening up choices for those who are looking to buy. Markets such as Denver-Aurora-Lakewood, Colo.; Columbus, Ohio; Seattle-Tacoma-Bellevue, Wash.; San Diego-Carlsbad, Calif.; and San Francisco-Oakland-Hayward, Calif., all saw some of the largest increase in active listings in September compared to a year ago, according to data from realtor.com®.
