U.S. pending home sales unexpectedly decline for a second month

U.S. pending home sales unexpectedly declined for a second straight month in July as limited inventory and soaring prices deterred some prospective buyers.

An index of pending home sales decreased 1.8% from June to 110.7, a three-month low, according to National Association of Realtors data released Monday. The median forecast in a Bloomberg survey of economists called for a 0.3% advance.

The figures underscore how sky-high prices for a limited number of listings are discouraging many Americans from buying a home. Looking ahead, loosening inventory constraints paired with still-low borrowing costs should support buyer demand.

“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,” Lawrence Yun, NAR’s chief economist, said in a statement. “That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months.”

Compared with a year earlier, contract signings were down 9.5% on an unadjusted basis.

Signings declined in three of four U.S. regions from the prior month, led by a 6.6% drop in the Northeast. Contract signings rose in the West by 1.9%.

A separate repor last week showed that sales of previously owned U.S. homes rose in July for a second month, suggesting firmer housing demand as inventory constraints eased slightly. That said, prices have jumped over the course of the pandemic. The median selling price of a previously owned home rose 17.8% from a year earlier to $359,900 in July.

Unlike existing-home sales, which are calculated when a contract closes, the index of pending home sales is based on contract signings.