The close of the summer real estate market showed a slower pace that had continued for a few consecutive months in a row. The reason for a slowdown in pending sales is due to challenges of limited housing stock available for purchase across the United States. Natural disasters including both hurricanes Harvey and Irma also add further dips in the pace that had been forecasted for 2017 according to the National Association of Realtors.
The National Association of Realtors’ pending home sales index has retracted by 2.6 percent to 106.3 in August from 109.1 in July. This is also 2.6 percent lower than last year and the lowest since January of 2016.
Lawrence Yun, NAR chief economist, says this summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year. “August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” he said. “Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”
The U.S. real estate market does not anticipate having a significant boost in inventory to help boost sales. Further complications for improvement include both hurricanes Harvey and Irma which will likely continue to provide a temporary dip in activity for the southern regions that were affected.
The adjusted prediction for existing home sales for 2017 is now expected to be around 5.44 million which is only 0.2% lower than the pace we saw in 2016. Sales prices, however, are expected to increase by 6% for this year.
“The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year,” said Yun. “The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9 percent.”