Earlier this year, there was a rebound in pending home sales decrease, marking 2016 as the best year for existing home sales since 2006. The National Association of Realtors (NAR) reported back in January 2017 that its Pending Home Sales Index (PHSI) increased 1.6% last month to 109.0, which put it 0.3% above last December—meaning that despite contract activity that was mixed throughout the entire country, the PHSI ultimately ended on a high note to close out 2016.
Fast forward just a few months and we find some drastically different circumstances. As of May 2017, pending home sales saw the largest decrease since 2014, with drops for two consecutive months. The NAR recently noted that its Pending Home Sales Index (based on contracts signed in April 2017 dropped 1.3% to 109.8 as contracts fell in the Northeast, Midwest and South – though sales did surge 5.8 % in the West.
Unfortunately, these low levels of supply don’t look like they’ll increase anytime soon, according to the report. Homebuilding has yet to pick up, and very few homeowners are putting their house on the market. The spring and summer housing markets continue to be plagued by a lack of homes for sale, and as tight supply continues to put an upward pressure on home prices — which are now rising at three times the rate of incomes—both home sellers and homebuyers seem to be trapped in an inevitably deepening housing market funk.
Existing homebuyers in the last two to three years dramatically overpaid for their properties. Looking ahead, there seems to be yet another round of trapped homebuyers unable to sell their homes right around the corner.
The next release of Pending Home Sales Index for May 2017 was released on Wednesday, June 28, 2017 at 10:00 a.m. Eastern Standard Time. Housing experts at the moment are hoping to revert back to the way more positive trends of 2016, remaining optimistic overall about home prices, but “to the detriment of future affordability.”
Some predictions for 2018 and beyond include:
• Less affordable housing in general, hurting Millennials and renters the most
• Wide variations in home price growth
• Home prices and rents rising way faster than income
• There will be no housing bubble in sight, as the risk of home price declines remains near rock bottom
• Homeownership rates will continue to sag and mortgage rates will continue to rise
• Policy changes will stimulate demand for more than supply – pushing up prices
Best Real Estate Resources Available
The Pending Home Sales (PHS) index measures housing contract activity and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. If you have any further questions about existing or future data, as well as concerns about the pending home sales decrease, contact Peak Corporate Network to make effective use of their inclusive range of real estate services. Draw on the power of their expert staff of experienced professionals to help you navigate the complexities of the real estate business, to make the right decisions, and to maximize the value of your assets.