Pending home sales in the U.S. rose just slightly in July and the increase was less than forecast, which could indicate the red-hot housing market could finally be leveling off.
According to the National Association of Realtors forward-looking Pending Home Sales Index—which measures signed contracts for purchases of previously owned home, home sales increased by just 0.5% last month. The Wall St. Journal reports that analysts had projected an increase of 1% in July.
However, despite the slowdown last month, pending home sales remain well above where they were a year ago. July was up 7.4% from a year earlier. It was the 11th straight month pending home sales have increased.
Most are attributing the slight slowdown to the dizzying pace of the housing market earlier this year. Here is what one analyst for Barclays said in a note to his clients, according to the Wall St. Journal.
“We are inclined to interpret the softness at the start of the quarter as payback after a strong performance at the beginning of 2015 and expect the housing market to remain in recovery mode,” said Barclays economist Blerina Uruci.
Home sales usually close within two months of signing, which is what this study measured. N.A.R. chief economist Lawrence Yun said the results indicate the housing market should remain steady into the fall.
“Led by a solid gain in the Northeast, contract activity in most of the country held steady last month, which bodes well for existing-sales to maintain their recent elevated pace to close out the summer,” Yun said.
The lone caveat from Yun was housing affordability. It remains a problem in most part of the country. Yun warned that “available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust.”
In the Midwest, the number of signed contracts in July was virtually unchanged from a month earlier.