“The current housing recovery could stall” if new construction does not pick up, according to the National Association of Realtors.
The NAR said in its monthly report on Thursday that pending sales of single-family homes, condos and co-ops fell 2.4% in August. Economists had forecast that sales were flat, according to Bloomberg.
Because pending sales reflect contract activity, they’re a good indicator of how many existing homes will eventually be sold.
Pending sales were expected to slow in August following a drop in mortgage applications.
But there’s the bigger, nagging problem of inadequate inventory that has left prospective homebuyers with few choices.
“Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract,” said Lawrence Yun, the NAR’s chief economist.
“In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the minuscule number of affordable listings,” he said.
In other words, people who want to buy homes need to find affordable choices, or else the market could slump.
The NAR released a study earlier in September showing that single-family home construction was lagging job creation and demand in 80% of the metro areas measured. The top metros where construction is urgently needed include New York, Dallas, San Francisco and Miami.
Year-on-year, sales were 4% higher. Economists had forecast an increase by 2.6%, not seasonally adjusted.
Housing-market data tend to be volatile and subject to revision on a monthly basis.