October 23, 2018

Pending home sales see seasonal softening, up from last year

New contracts on single-family, condominium and townhome sales in September were down from August. That's typical of the seasonal softening of the market. At the same time the pending sales trend shows a market on track for another record sales year.

The Northeast Tennessee Association of Realtors' (NETAR) New Pending Home Sales Index (PHSI), a forward-looking indicator based on new contract signing reported by Realtor Property Resource (RPR), was up by 0.9 percent from August (1.2 points).

There were 759 new approved contracts in September compared to 819 September last year, said Aaron Taylor NETAR President. "In a reversal from what we've seen for the past couple of months, there were more new approved contracts than new listing.  But since there were only two more new pending sales than new listing it won't have much effect," he added.  

"It's not unusual to see some market slowing as we move into fall, nor is it uncommon to see a spike in activity in October and November," Taylor said. "What's new this year is there are more sellers saying now is a good time to sell and buyers maneuvering to lock in the best rate they can get before the next round of mortgage rate increases."

September's new pending sales index was 132.6 up from 131.4 in August and 11.1 points higher than September last year.  The active pending sales index was 107.7 up 103.2 in August and up 14.6 points from last year. The PHSI is a leading indicator for the housing sector based on pending sales of existing homes, condos and townhomes. The benchmark of 100 for the index is the 2015 annual average for new approved contracts. A sale is listed as pending when a contract has been signed, but the transaction has not closed. Sales are typically finalized in a month or two after signing. It's not uncommon to see as many as 5 percent of pending sales fall through. Lately, that fall-through rate has been a little higher due to more sale of a current home and financing contingencies.

NETAR is the voice for real estate in Northeast Tennessee - is the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,200 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries.