Pending home sales in August decreased for the third straight month, including in three out of four major regions, according to the National Association of Realtors (NAR).
While the West saw a small, month-over-month gain in pending home sales in August, all four regions had double-digit declines in transactions year-over-year in August.
NAR’s Pending Home Sales Index (PHSI) fell 2 percent to 88.4 in August. Year-over-year, pending transactions dropped 24.2 percent.
“The direction of mortgage rates – upward or downward – is the prime mover for homebuying, and decade-high rates have deeply cut into contract signings,” NAR Chief Economist Lawrence Yun said in a release. “If mortgage rates moderate and the economy continues adding jobs, then home buying should also stabilize.”
Yun said he expects the economy will remain sluggish throughout the remainder of this year, with mortgage rates rising to close to 7 percent in the coming months.
“Only when inflation calms down will we see mortgage rates begin to steady,” Yun said.
NAR said it expects existing-home sales to decline 15.2 percent in 2022, to 5.19 million units, while it projects new home sales will fall by 20.9 percent. Yun forecasts prices will rise by 9.6% in 2022.
“Next year, the annual median home price is expected to rise by only 1.2 percent,” Yun added. “Home sales will pick up in the second half of 2023 but will be down by 7.1 percent overall.”