August 26, 2019

Pending sales see small monthly July gain; annual index up 11.6%

Pending homes sales squeaked out a small gain from June’s total, but movement of the pending sales index is a different story. It’s at a 28-month high.

There were 895 preliminary new contracts (pending sales) in July, up 9 from June. The active pending sales total rose to 1,450 – 200 more than there were in June, according to Realtor Property Resource (RPR).

The Northeast Tennessee Association of Realtors' (NETAR), Pending Sales Index, shows new contracts were 11.6 percent higher than July last year. That’s a 28-month high. The active pending sales index, which includes contracts from previous months that have not closed, was 20 percent higher than July last year.

Pending sales are a leading indicator of housing activity based on signed contracts for existing single-family homes, condominium, and townhome resales. Since resales go under contract a month or two before the deal is closed, the index typically leads existing home sales by about two months.  The index is based on a year-over-year rolling average of both new and existing resales contracts to take some of the statistical noise out of the data. Under normal market conditions, it’s not unusual to see up to 5 percent of contracts fall through. In today’s market, that fall-through rate is often higher due to contract contingencies.

A National Association of Realtors survey focused on April to June conditions found 70 percent of contracts faced a contingency in making it to closing. The most common contingencies were for home inspections (60 percent), obtaining financing (48 percent) and an acceptable appraisal (47 percent).

The most common reasons contracts were delayed was obtaining financing, followed by appraisal issues, then home inspections or environment issues, and finally titling and deed issues.

The national study found that while 20 percent of contracts saw delays while only 4 percent were canceled.

During the same period, 21.6 percent of the local contracts saw closing delays and 5.8 percent were canceled.

So far this year new listings are 7.9 percent better than the first seven months of last year while new pending sales are up 17.9 percent. The region had 3.5 months of inventory in July – unchanged from June. That’s the number of months it would take to exhaust active listings at July’s sales rate, said NETAR data analyst Don Fenley. It’s also the tightest inventory the region has seen since NETAR began reporting its monthly housing market report in 2008.

NETAR - the voice for real estate in Northeast Tennessee - is the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,250 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, monthly Trends reports, and the regional market analytics can be found on the NETAR websites at .