Pending home sales, in which a contract is signed but the sale has not yet closed, dropped 2.3 percent in August — the eighth consecutive month of annualized declines, according to the latest National Association of Realtors Pending Home Sales Index, released Thursday.

Low inventory and rising home prices propelled the latest decline, pulling the Pending Homes Sales Index down to 104.2, from 106.2 in July, said Lawrence Yun, chief economist with the National Association of Realtors. The index is based on a national sample of approximately 20 percent of all existing-home sales transactions, which tend to mirror monthly sales-contract activity.

“Contract signings also fell backward again last month, as declines in the West negatively impacted overall activity,” said Yun in a prepared statement. “The greatest decline occurred in the West region where prices have shot up significantly, which clearly indicates that affordability is hindering buyers and those affordability issues come from lack of inventory, particularly in moderate price points.”

Looking forward, Yun believes existing-home sales will decrease 1.6 percent to 5.46 million, and the national median existing-home price will increase by 4.8 percent. In 2019, existing sales and home prices will rise by 2 percent and 3.5 percent, respectively, Yun predicted.

Beyond deteriorating affordability, Yun believes rising mortgage rates will pose a threat to pending home sales in the coming months as some buyers postpone home purchases.

“As long as there is job growth, rising mortgage rates will hinder some buyers,” Yun added. “But job creation means second or third incomes being added to households, which gives consumers the financial confidence to go out and make a home purchase.”

Damage from Hurricane Florence is expected to push September and October pending home sales down in the Northeast, predicted Chief Economist Danielle Hale.

“Pending home sales continued to soften in August as limited inventory, rising mortgage rates and prices pushed some would-be buyers out of the market,” Hale said in a statement. “The outlook for pending home sales over next few months isn’t very bright as the market works through the damage caused by Hurricane Florence.”

“The Carolinas made up 6 percent of all for-sale inventory in the U.S. before the hurricane touched down and we expect it to have a significant impact on the September and October sales reports,” she added.

The West experienced the largest month-over-month and year-over-year declines at 5.9 percent and 11.3, respectively. The Northeast and Midwest experienced month-over-month losses of 1.3 percent and 0.5 percent, respectively, and year-over-year declines of 1.6 percent and 1.1 percent.

The South, despite having a year-over-year decline of 0.7 percent, was the only region to experience a year-over-year increase of 1.3 percent.

Email Marian McPherson.


Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription