Pending Home Sales Decline Slightly in July

The National Association of Realtors® (NAR) has reported their Pending Homes Sales Index (PHSI) — which is based on signed real estate contracts, not actual closings, for existing single-family homes, condos, and co-ops — declined -1.8%, in July 2021 to a reading of 110.7. An index of 100 is equal to the level of contract activity in 2001. Year-over-year contract signings also declined -8.5%. Only the West region registered a month-over-month gain in contract activity, while the other three major U.S. regions reported drops. All four regions saw transactions decrease year-over-year.

In remarks prepared for the release of the July PHSI, Lawrence Yun, NAR’s chief economist said, “The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers. That said, inventory is slowly increasing, and home shoppers should begin to see more options in the coming months.”

Yun added, “Homes listed for sale are still garnering great interest, but the multiple, frenzied offers — sometimes double-digit bids on one property — have dissipated in most regions. Even in a somewhat calmer market, a number of potential buyers are still choosing to waive appraisals and inspections.”

As of July, 27% of buyers bypassed appraisal and inspection contingencies. By refraining from these evaluations, in most cases, buyers are looking to accelerate the homebuying process, according to Yun.