There was bad news on the monthly pending home sales front and mildly bad news on the weekly mortgage applications front.
The National Association of Realtors’ Pending Home Sales Index (PHSI) reached 106.3 in August, a 2.6 percent decline from both the previous month and the previous year. This marks the PHSI’s lowest reading since January 2016 and the fifth time in six months that the index declined.
On a regional basis, the PHSI in the Northeast fell 4.4 percent to 93.4, while the Midwest index dropped by 1.5 percent to 101.8. Pending home sales in the South retreated 3.5 percent to an index of 118.8, while the index in the West dipped by one percent to 101.3.
“August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes,” said NAR Chief Economist Lawrence Yun. “Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search.”
Separately, the Mortgage Bankers Association (MBA) reported that its Market Composite Index, a measure of mortgage loan application volume, decreased 0.5 percent on a seasonally adjusted basis for the week ending Sept. 22 from one week earlier. On an unadjusted basis, the index was down by one percent compared with the previous week.
The seasonally adjusted Purchase Index increased three percent from one week earlier, while the unadjusted index was up by two percent compared with the previous week and was four percent higher than the same week one year ago. However, the Refinance Index dropped by four percent and the refinance share of mortgage activity decreased to 50.8 percent of total applications from 52.1 percent the previous week.
Among the federal programs, the FHA share of total applications decreased to 9.6 percent from 9.9 percent the week prior and the VA share of total applications decreased to 10 percent from 10.1 percent while the USDA share of total applications remained unchanged from the week prior at 0.7 percent.