September marked a slowdown in Americans signing contracts to buy homes, the second consecutive decline for a real-estate market that has been rebounding for the first half of 2015.
The National Association of Realtors said Thursday that its seasonally adjusted pending-home-sales index dropped 2.3 percent to 106.8 last month. The index has risen 3 percent over the past 12 months, aided by solid hiring levels and low mortgage rates that fueled stronger demand during the traditional summer buying season.
But evidence of fading momentum has surfaced in recent months. Sales of newly built homes fell 11.5 percent last month, as choppy financial markets and rising home prices are creating affordability pressures for would-be buyers. The strong demand for housing due to a stronger job market – with unemployment at a low 5.1 percent – has failed to produce an influx of new listings that could help sales.
Pending sales are a barometer of future purchases. A lag of a month or two usually exists between a contract and a completed sale. Signed contracts fell in the Northeast, Midwest and South last month, while dipping slightly in the West.
Over the past 12 months, sales of existing homes have risen 8.8 percent over the past 12 months. But the inventory on the market has dropped 3.1 percent, the Realtors said last week.
A mere 4.8 months’ supply of homes is available for would-be buyers, substantially below the 6 months’ supply associated with a healthy market.
The tight inventories have pushed up home values. The median home sales price was $221,900 in September, a 6.1 percent annual increase.
But historically low borrowing costs have offset the impact of rising prices.
The average fixed-rate, 30-year mortgage this week was 3.76 percent, down from 3.98 percent a year ago, according to the mortgage firm Freddie Mac.