August may have been a great month for new home sales but for pending home sales it was a different story, according to the latest data from the National Association of Realtors.
- M-O-M: The Pending Home Sales Index fell by 2.0% from July to a reading of 88.4 in August. An index of 100 is equal to the level of contract activity in 2001.
- Y-O-Y: Pending home sales are now down 24.2% when compared to 2021.
South Stay Above 100. Regionally, only the South has a pending home sales index above 100. The South, despite a 0.9% drop for the month, has an index at 105.4 in August, this is down 24.2% from one year ago.
- The Midwest fell 5.2% to 88.4, the Northeast was down 3.4% to 76.6, and the West slid 0.9% to 71.0. The West is now down the biggest year-over-year with a 31.3% drop.
Analysis. Lawrence Yun, chief economist at NAR, says it’s all about rates. “The direction of mortgage rates – upward or downward – is the prime mover for home buying, and decade-high rates have deeply cut into contract signings…If mortgage rates moderate and the economy continues adding jobs, then home buying should also stabilize.”
- Despite home prices beginning to fall month-over-month, Yun is still predicting that home prices will end 2022 up 9.6%. However, in 2023 Yun expects prices to rise by a meager 1.2%.
BOTTOM LINE: August was a good month for new home sales, not so much for pending.