The volume of contracts signed on home purchases in America (pending home sales) rose 8.1% in August from July after two months of sliding sales, according to the National Association of Realtors (NAR).
Although all regions experienced monthly growth, the Northeast actually fell 15.8% compared to this same time last year. In that same vein, pending home sales are down 8.3% over August of 2020.
This metric is used to indicate how many closings are coming down the pipeline nationally, so regardless of the volume compared to last year, closings are looking up compared to this summer.
NAR’s Chief Economist, Dr. Lawrence Yun said, “Rising inventory and moderating price conditions are bringing buyers back to the market. Affordability, however, remains challenging as home price gains are roughly three times wage growth.”
Dr. Yun also notes that this market imbalance “is unsustainable over the long-term.”
He adds that the Midwest and South are more moderately priced and are experiencing “stronger signing of contracts to buy,” which he notes is not surprising. “This can be attributed to some employees who have the flexibility to work from anywhere, as they choose to reside in more affordable places.”
Remote work is certainly shifting the landscape, but it remains unseen how permanent this shift is as our nation struggles to emerge from a persistent global pandemic.
It is worth noting that in the Midwest, pending home sales surged 10.4% monthly, bud dropped 5.9% annually. The Southern region rose 8.6% monthly, and is down 6.3% annually. In the West, contract signings rose 7.2% monthly and dipped 9.2% annually. In the Northeast, sales rose 4.6% monthly, and fell a whopping 15.8% annually.
Another forward-looking indicator remains worrisome as housings starts for single family homes fell 2.8% in August. But with home prices rising for the fourth consecutive month, there remains uncertainty in the market.