The National Association of Realtors says it’s optimistic the dwindling home sales that have plagued the real estate market this year could be about to reverse course in the coming months.
In its latest Pending Home Sales Index, a forward-looking indicator based on contract signings, the NAR noted that pending contracts have increased in all four major regions of the country. Overall, contract signings increased by 0.9 percent in June 2018 to a reading of 106.9.
“After two straight months of declines in pending home sales, home shoppers in a majority of markets had a little more success finding a home to buy last month,” said NAR Chief Economist Lawrence Yun. “The positive forces of faster economic growth and steady hiring are being met by the negative forces of higher home prices and mortgage rates. Even with slightly more homeowners putting their home on the market, inventory is still subpar and not meeting demand. As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.”
It should be noted however that contract signings are still down 2.5 percent compared to the same month one year ago, the NAR said. However, Yun reckons that we may have seen the worst of the inventory crunch that’s plagued U.S. real estate for the past year. He said that existing inventory bounced back up last month on an annual basis, the first increase in more than three years. He added that several of the U.S.’s largest metro areas saw inventory levels increase compared to the same period one year ago.
For example, inventory levels in Portland, Oregon, surged by a whopping 24 percent, while Providence in Rhode Island saw its inventory climb by 20 percent. Other cities, including Seattle (up 19 percent), Nashville, Tennessee (17 percent), and San Jose, California (15 percent) also saw significant increases in available home inventory.
“Home price growth remains swift, and listings are still going under contract at a robust pace in most of the country, which indicates that even with rising inventory in many markets, demand still significantly outpaces what’s available for sale,” Yun said. “However, if this trend of increasing supply continues in the months ahead, prospective buyers will hopefully begin to see more choices and softer price growth.”