Nationwide, pending residence Sales collectively fell for two consecutive months according to July data of the National Association of Realtors (NAR). While the Western region saw a month-over-month gain in contract activity, the other three major US regions saw declines, and all four regions saw deals decline by year after year, reports NAR.
“The market may be starting to cool slightly, but at the moment there is not enough supply to meet the demand from potential buyers,” said Lawrence Yun, chief economist at NAR. “That said, stocks are slowly increasing and residencebuyers should start seeing more options in the coming months.”
Some of the more unusual trends seen earlier in the year are beginning to fade and the market is showing signs of stabilization ahead.
“Houses put up for sale are still attracting great interest, but the multiple, frenzied bids — sometimes double-digit bids on a property — have dissipated in most areas,” Yun said. “Even in a somewhat calmer market, a number of potential buyers are still choosing to forgo appraisals and inspections.”
In July, 27% of buyers had bypassed appraisal and inspection contingencies. By refraining from these ratings, in most cases, buyers seek to expedite the residenceshopping process, Yun explained.
Regionally, month over month, the NAR Pending Home Sales Index for the North East region fell 6.6% to 92.0 in July, a decline of 16, 9% compared to a year ago. In the Midwest, the index fell 3.3% to 104.6 last month, down 8.5% from July 2020.
Waiting residence Sales deals in the South fell 0.9% to an index of 130.9 in July, down 6.7% from July 2020. The index in the West rose 1.9% in July to reach 99.8, but still down 5.7% from the previous year.
Yun expects mortgage rates to start rising slightly towards the end of the year. “This rise will soften demand and dampen price appreciation.”
“In the past year alone, rising house prices have translated into a substantial wealth gain of $45,000 for a typical homeowner,” he said. “These gains should moderate to around $10,000 to $20,000 over the next year.”
According to Yun, the 30-year fixed mortgage rate is expected to increase to 3.3% by the end of the year and average 3.6% in 2022.
With mortgage rates rising slightly, he expects existing home sales to decline slightly to 5.99 million from 6 million in 2021.
With demand easing and housing starts improving to 1.65 million from 1.565 in 2021, existing home sales prices are expected to rise at a slower pace of 4.4% in 2022 – than the 14 .1% of 2021 – to reach a median of $353,500.