Contract signings fell in July, reversing course after two consecutive months of gains, the National Association of REALTORS® reported on Thursday. All four major regions of the U.S. posted declines in pending home sales last month, with the West leading in the greatest month-over-month drop in contract signings.
Overall, NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 2.5% in July to a reading of 105.6. Still, it remains only 0.3% below year-ago levels.
“Super-low mortgage rates have not yet consistently pulled buyers back into the market,” says Lawrence Yun, NAR’s chief economist. “Economic uncertainty is no doubt holding back some potential demand, but what is desperately needed is more supply of moderately priced homes.”
Yun predicts GDP growth to ease 2% in 2019 and then by 1.6% in 2020. But escalating trade tensions are casting consumers’ rising doubts over the state of the economy.
Lower mortgage rates—with the 30-year fixed-rate mortgage averaging below 4%—are expected to continue throughout the year. Nevertheless, NAR predicts existing-home sales to stay mostly flat at 5.34 million for 2019.
Tight housing inventory conditions continue to push home prices upward. The median price of an existing home sold is rising at a slower pace of 4% in 2019 to $269,000. NAR predicts prices to rise by 3% in 2020, reaching a nationwide median of $278,500.
“A boost to homebuilding would greatly improve economic growth,” Yun says. “More free market prices on construction materials without government interference about where home builders have to get their supply will also help produce more and grow the economy. The housing industry cannot grow without more supply.”
