Hurricanes Harvey, Irma Could Stop Existing Sales Short of 2016
Pending home sales again underwhelmed in August, down 2.6 percent in the National Association of REALTORS® (NAR) Pending Home Sales Index (PHSI). The PHSI posted 106.3 in August, down from 109.1 in July. The Index is based on contract signings.
“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 at NAR. “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.”
Dire inventory levels over the summer essentially stopped progress, Yun says. Hurricanes Harvey and Irma will contribute to a sales slowdown in the coming months in the South, as well—and potentially prevent existing-home sales for the year from surpassing their 2016 numbers.
“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 now appear will fall slightly below last year,” says Yun. “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.”
“The slip in pending home sales highlights continued challenges in inventory, especially affordable inventory,” says Danielle Hale, chief economist for realtor.com®. “Realtor.com data shows that listings were down 10 percent overall in August and 20 percent for listings priced under $ 200,000, so this is a challenge that will persist and likely hamper home sales through the rest of the year. Dampened activity from Hurricane Harvey is also weighing, and will lead to lower home sales activity in the months ahead.”
All of the four major regions in the U.S. saw decreases in the PHSI in August, with the Northeast down 4.4 percent to 93.4, the South down 3.5 percent to 118.8, the Midwest down 1.5 percent to 101.8, and the West down 1.0 percent to 101.3.
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