It came very apparent when looking at NAR’s Pending Home Sales Index that tight inventory conditions were weighing down on contract activity this spring and early summer.
The three month decline in pending sales from March to May has now translated to July being the second straight monthly sales decline.
As NAR Chief Economist Lawrence Yun explained during this morning’s press conference, this pullback in sales is the result of a supply problem and not one of households turning their noses from buying a home. For most of this year, listings are typically going under contract about one week faster than even last year’s quick pace. There are buyers out there, but not enough listings for sales to really break out like they should be given the strength of the labor market.
Unfortunately, Yun says to expect more of the same heading into the fall. Competition in the affordable price range will remain stiff, prices will rise and new listings will likely fail to keep pace.