WASHINGTON — More Americans signed contracts to purchase homes in July, a sign that demand for home ownership remains strong despite a shortage of listings on the market.
The National Association of Realtors said Wednesday that its seasonally adjusted pending home sales index rose 1.3
Housing has staged a solid rebound in prices and sales this year, but the real estate market faces potential challenges as fewer properties are being listed for sale. Sales listings have slumped 5.8
Pending sales contracts are a barometer of future purchases. A sale is typically completed a month or two after a contract is signed — suggesting that finished sales should rebound after slipping in July.
The inventory shortage hit purchases of homes in July. The seasonally adjusted annual sales rate fell 3.2
Inventories have fallen on an annual basis for the past 14 months. The increased demand reflected by the improving sales has failed to cause more homeowners to list their properties on the market, suggesting that many are still recovering equity lost by the housing downturn. Without sufficient equity in their current homes, many of these owners would be unable to generate a down payment for another home with the proceeds from a sale.
But the shortage might also stem from the increase in first-time buyers this year. Existing homebuyers often sell their house in order to finance the purchase of another property, which keeps inventory levels stable. But first-timers are buying homes out of savings, so the number of listings should fall when a rising share of purchases go to this group, noted Tian Liu, chief economist at Genworth Mortgage Insurance.
"These buyers not bringing additional inventory to the market," he said.
The lack of supply has to home prices climbing at more than double the growth of average wages.
The median home sales price was $244,100 in July, up 5.3
Josh Boak, The Associated Press
©2016 The Canadian Press
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