After reporting a notable rebound in U.S. pending home sales in the previous month, the National Association of Realtors released a report on Wednesday showing an unexpected pullback in pending home sales in the month of July.
NAR said its pending home sales index dropped by 0.7 percent to 106.2 in July after jumping by 1.0 percent to an upwardly revised 107.0 in June.
Economists had expected pending home sales to rise by 0.3 percent compared to the 0.9 percent increase originally reported for the previous month.
With the unexpected monthly decrease, pending home sales in July were down by 2.3 percent compared to the same month a year ago, reflecting the seventh straight year-over-year decrease.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
“Contract signings inched backward once again last month, as declines in the South and West weighed down on overall activity,” said NAR chief economist Lawrence Yun.
He added, “It’s evident in recent months that many of the most overheated real estate markets – especially those out West – are starting to see a slight decline in home sales and slower price growth.”
The report said pending home sales slumped by 1.7 percent in the South and dropped by 0.9 percent in the West, while pending sales jumped by 1.0 percent in the Northeast and inched up by 0.3 percent in the Midwest.
NAR said Yun expects existing home sales this year to decrease 1.0 percent to 5.46 million and the national median existing-home price to increase around 5.0 percent.
Looking ahead to next year, existing home sales are forecast to increase 2 percent and home prices around 3.5 percent, NAR said.