Pending home sales declined 2.5% to an index reading of 106.3 in August, after an unrevised 0.8% drop to a 109.1 reading in July, according to a report released Wednesday by the National Association of Realtors.
The index hit its lowest reading since 106.1 in January 2016.
An index of 100 is equal to the average level of contract activity during 2001.
Year-over-year the pending homes sales index decreased 2.6% from last August, when the index was 109.1.
Regionally, pending sales were lower. The Northeast saw a 4.4% decline to 93.4, while sales dropped 1.5% to 101.8 in the Midwest and sales slid 3.5% in the South to 118.8. Sales fell 1.0% in the West 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,” NAR Chief Economist Lawrence Yun said. “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.”
Economists polled by IFR Markets predicted the index would be down 0.5%.
As shortage of available homes continues, exacerbated by hurricanes Harvey and Irma, leaving last year’s sales pace likely unreachable. According to Yun the housing market has essentially stalled.