After falling in August, pending home sales increased 0.5% in September compared with August to reach score of 104.6 on the National Association of Realtor’s (NAR) Pending Home Sales Index.
However, contract signings were down 1.0% compared with September 2017.
It was the the ninth straight month that pending home sales decreased on a year-over-year basis.
Regionally, pending home sales increased 4.5% in the West and 1.2% in the Midwest, but fell 0.4% in the Northeast and 1.4% in the South, month-over-month.
Year-over-year, pending home sales fell 7.4% in the West, 2.7% in the Northeast and 1.1% in the Midwest, but were up 3.3% in the South.
In a statement, Lawrence Yun, chief economist for NAR, says the slight month-over-month increase is a positive sign because it shows that pending home sales may be stabilizing after decreasing for most of 2018.
“This shows that buyers are out there on the sidelines, waiting to jump in once more inventory becomes available and the price is right,” Yun says.
Lack of inventory of moderately priced homes continues to be the main factor holding back home sales, he says.
Yun says compared with the past few decades, affordability is still favorable.
“When compared to the year 2000, when the housing market was considered very healthy and home sales figures were roughly equivalent, the affordability conditions were much lower compared to now,” he says. “So even though affordability has been falling recently, the demand for housing should remain steady.”
Yun points out that despite the fact that housing market is down this year, the U.S. economy as a whole is “thriving,” which means that pent-up demand for housing will continue to build until adequate affordable inventory is bought online.
Yun points out that inventory is already starting to increase in certain markets, including Denver-Aurora-Lakewood, Colo., Columbus, Ohio, Seattle-Tacoma-Bellevue, Wash., San Diego-Carlsbad, Calif., and San Francisco-Oakland-Hayward, Calif.
These markets saw the largest increase in active listings in September compared to a year ago.