A pending sale sign in front of a Miami home.
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According to the National Association of Realtors, contracts signed to acquire previously owned homes fell 1.8% in July from June.
High house prices have led to a sharp drop in prices in recent months. According to realtors, the average price of an existing home increased by 18% in July. Much of this was due to the fact that there was much more activity at the upper end of the market, which distorted this average.
Pending sales are a prospective indicator of sales closed in one or two months.
“The market may start to cool slightly, but at the moment there is not enough supply to meet the demand of potential buyers,” Lawrence Yun, chief economist at real estate agents, said in a statement. “That said, inventory is rising slowly and home buyers should start seeing more options in the coming months.
Mortgage rates fell sharply during the month of July, with the popular 30-year average starting the month at 3.18% and ending at 2.84%, according to Mortgage News Daily. This drop gave buyers more purchasing power, which probably helped those who are on the verge of offering high prices for current homes. However, lower rates were not enough to truly make the market.
Outstanding sales fell 8.5% compared to July last year. This annual comparison, however, is unusual, as sales rose sharply last summer after the initial shutdown due to the pandemic.
At the regional level, the outstanding sales index of real estate agents fell by 6.6% per month in the Northeast and fell by 16.9% year-on-year. In the Midwest it fell 3.3% during the month and 8.5% from July 2020.
In the south, sales fell 0.9% during the month and fell 6.7% year-on-year. In the West, sales rose 1.9% month-on-month and fell 5.7% year-on-year.
“The homes that are for sale are still gaining a lot of interest, but the multiple frantic bids (sometimes double-digit bids on a property) have dissipated in most regions,” Yun said.
The total inventory of homes at the end of July amounted to 1.32 million units, 7.3% more than the supply in June and 12.0% less than a year ago (1.50 million) . There was an unsold inventory supply for 2.6 months at the July sales pace
Closed sales of existing homes in July, representing contracts signed in May and June, rose for the second month in a row.