Home buyers made a strong comeback in August, pushing contract signing up 8.1% over July’s numbers, the National Association of REALTORS® reported Wednesday. The increase in pending home sales followed two consecutive months of declines.
“Rising inventory and moderating price conditions are bringing buyers back to the market,” says Lawrence Yun, NAR’s chief economist. “Affordability, however, remains challenging as home price gains are roughly three times wage growth.” Such an imbalance in the market is unsustainable over the long term, Yun adds.
The median existing-home sales price was $356,700 in August, according to NAR data. That is up 14.9% compared to August 2020. But that does mark a slower annual rate for price increases than previous months.
Despite August’s uptick, NAR’s Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—is still down 8.3% compared to a year ago, when the pandemic sent home sales soaring as buyers competed against a fewer number of homes for sale. Still, in August, all four major regions of the U.S. saw month-over-month growth in contract activity, led by the Midwest and the South.
“The more moderately priced regions of the South and Midwest are experiencing stronger signing of contracts to buy, which is not surprising,” Yun says. “This can be attributed to some employees who have the flexibility to work from anywhere, as they choose to reside in more affordable places.”
Here’s a closer look at how pending home sales fared across the country in August:
Northeast: Pending home sales increased 4.6% in August month-over-month to a reading of 96.2 on NAR’s Pending Home Sales Index (an index reading of 100 is equal to the level of contract activity in 2001). That marks the largest drop of the regions—a 15.8% drop compared to a year ago.
Midwest: Pending home sales rose 10.4% to a reading of 115.4 in August, down 5.9% compared to a year earlier.
South: Contract signings climbed 8.6% to an index reading of 141.8 last month, down 6.3% from August 2020.
West: Pending home sales increased 7.2% in August to 107—down 9.2% from a year prior.
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"Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission."