High prices and low supply are keeping potential home buyers at bay.
An index measuring signed contracts to buy existing homes was flat in September, according to the National Association of Realtors, but August's reading was revised down. That puts the index at its lowest level since January 2015. It is down 3.5 percent from a year ago.
Pending home sales have fallen on an annual basis now for five of the past six months, and Realtors say they do not expect much improvement unless the supply issue eases, which is unlikely.
"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, chief economist for the Realtors in a release. "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."
Pending home sales in the Northeast rose 1.2 percent for the month and are 2.4 percent lower than a year ago. In the Midwest, sales rose 1.4 percent for the month and are 2.5 percent below September of 2016. Sales in the South fell 2.3 percent monthly and are down 5 percent annually. Sales in the West were higher by 1.9 percent monthly and down 2.9 percent from a year ago.
Hurricane Irma may have slowed some of the activity in Florida, but sales in Houston rebounded strongly after Hurricane Harvey. Realtors expect Florida sales will rebound in the same way next month.
Closed sales of existing homes were essentially flat in September, with the Realtors blaming falling supply for the lackluster showing. Inventory has fallen annually for 28 consecutive months and was down 6.4 percent from September of 2016.
Sales of newly built homes, which are recorded by the U.S. Census as signed contracts during the month, not closings, jumped a striking 19 percent month-to-month. The biggest driver was sales in the South, and analysts say that was likely demand pulled forward, especially in Houston, the largest market for newly built homes, after most business stalled during the hurricane.