Pending home sales were unchanged in September, but activity declined on an annual basis both nationally and in all major regions, according to the National Association of Realtors (NAR). The Pending Home Sales Index, a forward-looking indicator based on contract signings, was at 106.0 in September (unchanged from a downwardly revised August figure. The index is now at its lowest reading since January 2015 (104.7), is 3.5% below a year ago, and has fallen on an annual basis in five of the past six months.

“Demand exceeds supply in most markets, which is keeping price growth high and essentially eliminating any savings buyers would realize from the decline in mortgage rates from earlier this year,” said Lawrence Yun, NAR chief economist. “While most of the country, except for the South, did see minor gains in contract signings last month, activity is falling further behind last year’s pace because new listings aren’t keeping up with what’s being sold.”

“Hurricane Irma’s direct hit on Florida weighed on activity in the South, but similar to how Houston has rebounded after Hurricane Harvey, Florida’s strong job and population growth should guide sales back to their pre-storm pace fairly quickly,” Yun added.

As has been the case most of the year, Yun says the ongoing supply constraints continue to squeeze prospective buyers the most at the lower end of the market. Last month, first-time buyers were 29% of all transactions, which matched the lowest share in exactly two years. Existing sales were also down notably on an annual basis in the price range below $250,000, but up solidly the higher up the price bracket.

“Buyers looking for a little relief from the stiff competition from over the summer may unfortunately be out of luck in the coming months,” said Yun. “Inventory starts to decline heading into the winter, and many would-be buyers from earlier in the year are still on the hunt to find a home.”

The PHSI in the Northeast rose 1.2% to 94.5 in September, but is still 2.4% below a year ago. In the Midwest the index climbed 1.4% to 102.9 in September, but remains 2.5% lower than September 2016. Pending home sales in the South decreased 2.3% to an index of 115.9 in September and are now 5% below last September. The index in the West grew 1.9% in September to 102.7, but is 2.9% below a year ago.

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