Signed contracts to buy existing homes increased 8.1% month to month in August, according to the National Association of Realtors, as buyers encountered higher inventory and slightly more favorable prices.
Analysts were expecting a 1% monthly increase. Signings were still down 8.3% compared with August 2020.
August’s increase followed two months of declines, according to the NAR.
These so-called pending home sales are a future indicator of signed contracts in one to two months.
“Rising inventory and moderating price conditions are bringing buyers back to the market,” said Lawrence Yun, NAR’s chief economist. “Affordability, however, remains challenging as home price gains are roughly three times wage growth.”
Home prices in July were up nearly 20% nationally year over a year, according to the latest S&P Case-Shiller home price index, but that is a three-month average going back to May. The increase in supply has lowered the number of bidding wars, according to real estate agents.
Sales rose the most in the least-expensive regions, namely the Midwest and South, reflecting how the shift to remote work in some industries gave buyers an incentive to relocate.
“The more moderately priced regions of the South and Midwest are experiencing stronger signing of contracts to buy, which is not surprising,” Yun said. “This can be attributed to some employees who have the flexibility to work from anywhere, as they choose to reside in more affordable places.”
In the Midwest, sales rose 10.4% monthly and were down 5.9% from August 2020. In the South, pending sales increased 8.6% monthly and dropped 6.3% annually.
Sales in the West rose 7.2% monthly and were down 9.2% from a year prior. Pending sales rose 4.6% in the Northeast month to month but were down 15.8% from a year ago.