Pending home sales fell 2.6% in August compared with July to a score of 106.3 on the National Association of Realtors (NAR) pending home sales index.
That’s down from a score of 109.1 in July.
It’s also down 2.6% compared with August 2016.
It was the fifth time in six months that pending home sales fell on a year-over-year basis. What’s more, it was the lowest reading since January 2016.
The main reason for the decrease in pending home sales in August was lack of inventory. However, Hurricane Harvey, which hit the greater Houston, Texas, area in late August, likely had some impact.
NAR predicts that hurricanes Harvey and Irma will likely have some impact on pending and existing home sales in the months to come.
“August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” says Lawrence Yun, chief economist for NAR, in a statement. “Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”
With the inventory shortage unlikely to improve anytime soon, the housing market has essentially stalled, Yun says.
As a result of this trend, plus the potential impact from the storms, NAR has revised its forecast for existing-home sales for 2017. The firm is now predicting that existing-home sales will close out the year at around 5.44 million – slightly below the 5.45 million seen in 2016.
The national median existing-home price this year is expected to increase around 6%.
In 2016, existing sales increased 3.8% and prices rose 5.1%.