"Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract," said Lawrence Yun, NAR's chief economist. "In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings."
New home construction has not picked up much this year, with single family housing starts falling 6 percent in August compared to July, according to the U.S. Census. Yun warned that without bigger gains in home construction, the current housing recovery could stall. The supply of homes for sale has declined on an annual basis for 15 straight months, and homes are selling at a far quicker pace compared to a year ago.
The stark lack of supply continues to push home price gains. A monthly reading of home prices nationally in July by S&P CoreLogic Case-Shiller showed a 5.1 percent annual gain, up from 5.0 percent in June. Prices also posted monthly gains.