Pending home sales slip to 19-month low in August

Pending home sales slipped in August to the lowest level in 19 months as a mixture of low supply and severe weather weighed heavily on the housing market.

Sales, which are based on contract signings, dropped 2.6 percent to 106.3 in August from 109.1 in July, the fifth decline in six months, and the lowest reading since January 2016, the National Association of Realtors (NAR) said on Wednesday.

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Slower activity in states such as Texas and Florida that were battered by Hurricanes Harvey and Irma may hold existing-home sales below the pace set in 2016, NAR said.

Also, the housing market's growth has been hampered by low levels of homes for sale, which have sapped some momentum over the past year.

"August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” said Lawrence Yun, NAR chief economist.

“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," Yun said. 

With little chance that supplies will improve, the market has stalled, he said.

Further complicating any sales improvement is the damage done to the Houston area by Hurricane Harvey, which contributed to the South’s decline in contract signings last month and will likely continue to do so in the months ahead.

The temporary pause in activity in Florida this month in the wake of Hurricane Irma is expected to slow sales even more in the South.

Existing-home sales are now expected to wrap up this year at about 5.44 million, which is slightly below the 5.45 million pace set in 2016, Yun said. 

The median existing-home price is expected to increase around 6 percent.

In 2016, existing-home sales increased 3.8 percent and prices rose 5.1 percent.

"The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 it now appears will fall slightly below last year," Yun said. "The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9 percent.”

Regionally, sales in the Northeast fell 4.4 percent, 1.5 percent in the Midwest, 3.5 percent in the South and 1 percent in the West.