Northeast Pending Home Sales Fell Nearly 5% in August

WASHINGTON—U.S. pending home sales in August rose 0.6%, according to a report released today (Sept. 26) by the National Association of Realtors. The Midwest, South and West posted monthly gains in transactions, while the Northeast recorded a loss. Year-over-year, the West registered growth, but the Northeast, Midwest and South declined.

The Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—increased to 70.6 in August. Year-over-year, pending transactions were down 3.0%.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 million to 5.5 million, which is considered normal for the current U.S. population.

“A slight upward turn reflects a modest improvement in housing affordability, primarily because mortgage rates descended to 6.5% in August,” said NAR Chief Economist Lawrence Yun. “However, contract signings remain near cyclical lows even as home prices keep marching to new record highs.”

The Northeast PHSI diminished 4.6% from last month to 61.6, a drop of 2.2% from August 2023. The Midwest index intensified 3.2% to 70.0 in August, down 3.6% from one year ago. The South PHSI grew 0.1% to 83.6 in August, receding 5.3% from the prior year. The West index increased 3.2% in August to 58.0, up 2.7% from August 2023.

“In terms of home sales and prices, the New England region has performed relatively better than other regions in recent months,” Yun noted “Contract signings rose in both the most affordable and most expensive regions—the Midwest and West, respectively—because mortgage rates have fallen nationally. Housing affordability will continue to see notable improvements.”

“The Federal Reserve does not directly control mortgage rates, but the anticipation of more short-term interest rate cuts has pushed long-term mortgage rates down to near 6% in late September,” added Yun. “On a typical $300,000 mortgage, that translates to approximately $300 per month in mortgage payment savings compared to a few months ago.”