While the National Association of Realtors Pending Home Sales Index ticked up 3.3 percent from June to July, it’s still running 2.1 percent lower on a year-over-year basis while the inventory of homes for sale across the country is at its highest level in two years.
The Pending Home Sales index for the West rose 4.0 percent from June to July but remains 6.0 percent lower versus the same time last year.
My interpretation — since last year the large institutional investors have largely pulled out of the buying market (i.e. the ones who were buying houses in order to rent them out), so sales have slowed down. What you are seeing is now a more “natural” demand rate of actual individuals who want to buy houses — and while the market is a bit slower than last year, it is still a positive market. We are unlikely to see quite the same level of appreciation as last year — but housing is still going up in value. This is normal coming off the bottom of any market — there is a rapid climb off the lows that shocks people out of their fear — and then a longer, but slower, phase of steady gains, and a general widening of participation in the market beyond the early movers.
So, I would say that this is still an excellent market to be buying housing — by all indications the economy is stable and has plenty of room to keep growing, and housing is “normalizing” and is fairly stable (minus the drying up of institutional investors — but that is a good thing too….)