The numbers: Fewer Americans signed on the dotted line in July to purchase a home — but it’s likely too early to say whether that’s a signal of a cooling market.
Pending home sales fell 1.8% in July compared with June, the National Association of Realtors reported Monday. Economists polled by MarketWatch had projected a 0.5% increase for pending home sales in July.
The pending home sales index measures real-estate transactions where a contract was signed for a previously-owned home, but the sale had yet to close, benchmarked to contract-signing activity in 2001. It serves as an indicator of the direction of existing-home sales in the months to come, which is based on closed transactions.
What happened: Compared to last year, there was an even more significant decline in pending home sales, with an 8.5% drop.
On a regional basis, only the West saw an improvement in contract signings, with a 1.9% monthly increase. The Northeast experienced the largest monthly decline of any region, with a 6.6% drop from June. Every region saw pending home sales decrease on an annual basis.
The big picture: While this is the second straight month in which pending home sales declined, it’s possibly too soon to tell whether the market is cooling in earnest.
“The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers,” Lawrence Yun, chief economist for the National Association of Realtors, said in the report. “That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months.”
What they’re saying: “In a noticeable shift, homeowners responded to market trends and started listing homes in larger numbers,” said George Ratiu, manager of economic research at Realtor.com. “With mortgage rates still under 3%, first-time buyers can look forward to a fall season with more affordable house options.”