Pending home sales dipped modestly in July, noting two consecutive months of declines, according to the National Association of Realtors. Only the West region registered a month-over-month gain in contract activity, while the other three major U.S. regions reported drops. All four regions saw transactions decrease year-over-year.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, declined 1.8 percent to 110.7 in July. Year-over-year, signings fell 8.5 percent. An index of 100 is equal to the level of contract activity in 2001.
“The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers,” said Lawrence Yun, NAR’s chief economist. “That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months.
“Homes listed for sale are still garnering great interest, but the multiple, frenzied offers – sometimes double-digit bids on one property – have dissipated in most regions,” said Yun. “Even in a somewhat calmer market, a number of potential buyers are still choosing to waive appraisals and inspections.”
As of July, 27 percent of buyers bypassed appraisal and inspection contingencies. By refraining from these evaluations, in most cases, buyers are looking to accelerate the home buying process, according to Yun.
July Pending Home Sales Regional Breakdown
Month-over-month, the Northeast PHSI fell 6.6 percent to 92.0 in July, a 16.9 percent decrease from a year ago. In the Midwest, the index dropped 3.3 percent to 104.6 last month, down 8.5 percent from July 2020.
Pending home sales transactions in the South declined 0.9 percent to an index of 130.9 in July, down 6.7 percent from July 2020. The index in the West rose 1.9 percent in July to 99.8, but still down 5.7 percent from a year prior.