Pending homes sales rose by 8.1. percent in August, following two consecutive months of declines in June and July, according to the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI) released on Wednesday.
The news followed a week in which home price growth numbers released by Case-Shiller for July revealed the U.S. experienced record price growth, not seen since at least 1987.
All four major regions in the country posted monthly gains in contract activity, while simultaneously reporting year-over-year declines in contract activity.
The PHSI surged to 119.5 in August, up 8.1 percent from July and up 6.3 percent from June, but down 8.3 percent year over year. A PHSI of 100 equals the level of contract activity present in 2001.
Despite August gains in contract signings, housing affordability remains an obstacle for some buyers hoping to enter the market.
“Rising inventory and moderating price conditions are bringing buyers back to the market,” NAR Chief Economist Lawrence Yun said in a statement. “Affordability, however, remains challenging as home price gains are roughly three times wage growth.”
“Buyers ran into headwinds, as a 10 basis point increase in average mortgage rates combined with double-digit price gains to blunt affordability,” George Ratiu, realtor.com manager of economic research, wrote in a statement emailed to Inman. “While families with school-age children hurried to close deals before the new school year, other would-be buyers took a breather from a fast-paced real estate market, leading to a decline in sales during the month.”
Yun noted that more affordable markets in the South and Midwest are seeing the strongest gains amid the general wave of rising home prices across the country.
“The more moderately priced regions of the South and Midwest are experiencing stronger signing of contracts to buy, which is not surprising,” Yun said. “This can be attributed to some employees who have the flexibility to work from anywhere, as they choose to reside in more affordable places.”
By region, the Midwest saw the greatest monthly gains, with the region’s PHSI increasing 10.4 percent to 115.4. On an annual basis, the index dropped 5.9 percent from August 2020.
Pending home sales rose 8.6 percent in the South to an index of 141.8, while also declining by 6.3 percent from the year before.
In the West, the PHSI increased 7.2 percent from July to 107.0, but was down 9.2 percent from August 2020.
The Northeast PHSI saw the slightest monthly gains during August, increasing 4.6 percent to 96.2, a drop of 15.8 percent from the previous year.