September 26, 2018

Pending home sales soften in August

New contracts on single-family, condominium and townhome sales in August were down by 46 from July and flat when compared to August last 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 unchanged from July and down from August last year. The moving average trend has been ebbing since May.

There were 710 new approved contracts in August compared to 711 August last year, said Aaron Taylor NETAR President. "We had 4.6 months of inventory of homes for sale in the region last month. That's the best we've seen since March." At the same time, there were 28 more new pending sales than new listings last month so the crunch isn't over yet, 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 we're seeing some buyer fatigue; however local prices remain competitive and interest rates are increasing. "That's motivating buyers to lock in the best deals they can find."

August's new pending sales index was 130.5 unchanged from July and down 9.5 points from August last year.  The PHSI is a leading indicator for the housing sector based on pending sales of existing homes, condos and townhomes. The benchmark 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.