The National Association of Realtors (NAR) Pending Homes Sales Index – a forward-looking indicator based on contract signings – dropped 2.5 percent from June to July, reversing a two-month trend of gains. Year-over-year contract signings were down 0.3 percent.
“Super-low mortgage rates have not yet consistently pulled buyers back into the market,” NAR Chief Economist Lawrence Yun said in a statement. “Economic uncertainty is no doubt holding back some potential demand, but what is desperately needed is more supply of moderately priced homes.”
Yun expects that the country’s gross domestic product growth will ease to 2 percent by the end of the year and 1.6 percent in 2020, but those predictions remain uncertain due to trade tensions. As growth slows, interest rates will remain low, Yun said. Nonetheless, tight inventory will force prices up, albeit at a slower rate.
“A boost to home building would greatly improve economic growth,” Yun said. “More free market prices on construction materials without government interference about where homebuilders have to get their supply will also help produce more and grow the economy. The housing industry cannot grow without more supply.”