After a brief improvement in June, home sales continued their downward slide in July, with buyers signing fewer contracts to buy existing homes.
An index of so-called pending home sales, which represent closings one to two months from now, fell 0.8 percent compared to June, according to the National Association of Realtors. That is the fourth monthly drop in the past five months. June’s reading was also revised lower. The index is now 1.3 percent below a year ago and has fallen on an annual basis in three of the past four months.
“Buyer traffic continues to be higher than a year ago, the typical listing has gone under contract within a month since April,” said Lawrence Yun, chief economist for the Realtors. “The reality, therefore, is that sales in coming months will not break out unless supply miraculously improves. This seems unlikely given the inadequate pace of housing starts in recent months and the lack of interest from real estate investors looking to sell.”
The supply of homes for sale at the end of July came in at 2.11 million, 9 percent lower than a year ago. That has fallen year-over-year for 26 consecutive months.
“The housing market remains stuck in a holding pattern with little signs of breaking through. The pace of new listings is not catching up with what’s being sold at an astonishingly fast pace,” Yun added.
Closed sales to buy existing homes fell more than expected in July, with Realtors citing the lack of supply as the primary reason. Prices are also a factor though. The median price of a home sold in July hit $258,300, the highest July price on record. Mortgage rates have been falling through the summer and are now sitting at 2017 lows, but they are still slightly higher than one year ago. Rates have been so low for so long that they provide little relief from the fast-rising prices.
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