Photo: Dan Moyle/Flickr
In August pending home sales in the US were up year-over-year for the 12th straight month despite a slight month-over-month drop, according to the National Association of Realtor’s (NAR) pending home sales index (PHSI).
Last month’s index, which covers all housing types, was down to 109.4 from 110.9 in July, a 1.4 percent decline. However, that reduced transaction level was still enough to push the index to 6.1 percent over August 2014’s index of 103.1.
The PHSI provides insight into future home sales by looking at transactions that have not yet closed but for which a contract has been signed. It is based on about 20 percent of all transactions.
An index of 100 means contract activity is happening at the exact same rate as it was in 2001, the first year the index was applied to.
“Pending sales have leveled off since mid-summer, with buyers being bounded by rising prices and few available and affordable properties within their budget,” said Lawrence Yun, NAR’s chief economist, in a statement.
Of the four regions tracked — Northeast, Midwest, South, West — only the West had a higher month-over-month index. There, the index measured 104.9, a 1.8 percent increase over July and 7.6 percent stronger than it was in August 2014.
It was a different story last month, when three out of four regions saw month-over-month PHSI gains.
The next best region to the West in August was its neighbour the Midwest. The Heartland’s index remained virtually unchanged, only dropping a meager 0.4 percent last month to 107.4. That’s still 6.5 percent higher than it was in August 2014.
The Northeast experienced the biggest decline. The PHSI in the Northeast was 93.3 last month, marking a 5.6 percent decline month-over-month. However, this region has seen the biggest year-over-over gain; the index was 8.9 percent higher than it was in August 2014.
Rounding out the list is the South, where the PHSI dipped down 2.2 percent to 121.5. This change still represents a 4.1 percent improvement year-over-year in August.
When creating the PHSI, NAR found that monthly contract activity is in line with the number of closed existing home sales seen in the two months that follow.
“Even with existing-housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago,” said Yun in the same statement.