US pending home sales index for July misses forecasts
A widely-followed lead indicator of activity in the US housing market for the month of July undershot economists' forecasts on Wednesday.
The National Association of Realtors' Pending Home Sales Index fell by 0.7% month-on-month to reach 106.2, falling short of a consensus forecast for a rise of 0.5%.
Versus a year ago, the PHI was left standing 2.3% lower.
Lawrence Yun, the NAR's chief economist blamed fewer contract signings in the South and West, blaming years of inadequate supplies yet strong job growth in the most overheated markets for the decline.
"The reason sales are falling off last year’s pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it," Yun said.
However, Yun's forecasts called for higher inventories in several large metro areas "and especially many out West" which were likely to help "cool price growth to more affordable levels."
Yun was projecting existing home sales would fall by roughly 1.0% to an annualised rate of 5.46m in 2018, alongside a 5.0% increase in the national median existing home price, followed by growth of 2.0% and about 3.5%, respectively, in 2019.
Blerina Uruci at Barclays Research was of a similar opinion to Yun, telling clients: "We think that the weak inventory situation of existing homes continues to constrain sales activity. Pending home sales measure housing contract activity and are based on signed real estate contracts for existing single-family homes, condos and co-ops.
"About 80% of pending homes sales will become existing home sales within two months. As a result, we can expect existing home sales to move broadly sideways in the coming months in line with the trend in pending home sales."