After reaching a two-year peak, pending home sales fell in August but are at elevated levels compared with a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.
Pending home sales declined 2.6% in August but were 10.7% above August 2011, NAR data shows. Contract activity in July 2012 was at the highest level since April 2010, when buyers were rushing to beat the deadline for the home buyer tax credit.
Some volatility can be expected in the monthly readings, said NAR Chief Economist Lawrence Yun. “The performance in month-to-month contract signings has been uneven, with ongoing shortages of lower-priced inventory in much of the country, and across most price ranges in the West, but activity has remained at notably higher levels this year,” Yun said.
“The index shows 16 consecutive months of year-over-year increases, and that has translated into a higher number of closed sales. Year-to-date existing-home sales are 9% above the same period last year, but sales were relatively flat from 2008 through 2011,” Yun added.
NAR predicts home sales this year will rise 9% to 4.64 million, and gain another 8% in 2013 to nearly 5.02 million. With generally balanced inventory conditions in many areas, NAR is projecting the median existing-home price is projected to rise about 5% in both 2012 and 2013.
Regional home sale contracts
Pending home sales in the Northeast rose 0.9% in August, up 19.9% above August 2011. In the Midwest, the index declined 2.6% but was also 19.9% higher than a year ago. Pending home sales in the South slipped 1.1% in August but were 13.2% above August 2011. Spurred by a shortage in homes for sale, the index fell 7.2% in the West August and was 4.2% below a year ago.
Housing starts are forecast to stay on an uptrend and reach 1.12 million next year, but will remain well below long-term underlying demand, with builders facing obstacles in obtaining construction loans.