Pending home sales have risen each month year-over-year for 12 straight months, however, there are several looming “speed bumps” that could have an adverse impact on housing in the near future, according to the National Association of Realtors (NAR).
NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 1.4% to 109.4 in August, compared to 110.9 in July—but is still 6.1% higher than its August 2014 level.
Even with the modest decline in contract signings, NAR Chief Economist Lawrence Yun says demand continues to outpace housing supply and elevate price growth in numerous markets.
“Pending sales have levels off since mid-summer, with buyers being bounded by rising prices and few available and affordable properties within their budget,” Yun said in a written statement. “Even with existing-housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago.”
While Yun believes that sales in the coming months should be able to maintain their current pace, he warns of several looming speed bumps that have the potential to impact housing.
“The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being,” he said. “Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales.”
On a national level, the median existing-home price is expected to increase 5.8% in 2015 to $220,300, according to NAR projections. For the year, Yun forests total existing-home sales to increase 7% to around 5.28 million, about 25% below the prior peak set in 2005 of 7.08 million.
Written by Jason Oliva