NAR just came out with an encouraging report for homebuyers. What first-timers can expect this fall.
Homes that went under contract for purchase, aka “pending sales” declined again in July, further signaling a return to normal in the housing market.
This means first-time homebuyers could have better luck landing a home compared to any other time thus far into 2021.
The National Association of Realtors® (NAR) reported an encouraging statistic: there was a 1.8% decrease in pending home sales during July, which follows a 2% decrease in both May and June.
It may not sound like much, but a cumulative near-6% decline in sales is welcome news in a white-hot housing market.
Fewer homes getting snatched up now means there could be more homes on the market in a few months.
It usually takes about 45 to 60 days for a pending sale to close and become a recorded home sale. So pending sales help predict actual home sales over the next couple of months.
What do pending sales numbers mean for homebuyers?
A declining pending sales index means fewer people entered a contract to buy an existing home in July compared to June. In June, pending sales waned 2% compared to May.
Combined with other metrics, two consecutive months of declining pending sales point to a cooler housing market which could open more doors to first-time homebuyers, many of whom struggled to get offers accepted by sellers during the pandemic.
But even with the decline in pending sales, housing markets remain brisk, according to the NAR’s chief economist Lawrence Yun.
There still isn’t enough housing supply to match demand from buyers, Yun said in a news release from NAR. But he expects homebuyers will “begin to see more options in the coming months.”
Real estate broker Redfin released July data that affirmed Yun’s prediction: Fewer of the broker’s listings received multiple offers, showing a cooling off of the bidding wars that shut many first-time homebuyers out of the market earlier this year.
First-time homebuyers, on average, bring smaller down payments to the closing table than investors or seasoned buyers. They tend to rely more on government-backed loans that can extend competitive interest rates to borrowers with only average credit scores.
So it can take a little longer for a first-time buyer to get through the mortgage application process and complete a home purchase.
Home sellers whose listings attract multiple buyers will typically accept the most attractive offer. For most sellers, the most attractive offer is the one most likely to close quickly and easily.
Sometimes, sellers even get all-cash offers which are difficult to compete with.
As the market cools and sellers have fewer offers to choose from, first-time buyers could have more success finally getting an offer accepted.
Along with tracking pending sales across the nation, NAR records pending sales in the Northeast, Midwest, South, and West.
Pending sales increased only in the West during July:
|Region||July 2021 pending sales||June 2021 pending sales||Pending sales since July 2020|
|Midwest||⬇ 3.3%||⬆ 0.6%||⬇ 8.5%|
|Northeast||⬇ 6.6%||⬆ 0.5%||⬇ 16.9%|
|South||⬇ 0.9%||⬇ 3%||⬇ 6.7%|
|West||⬆ 1.9%||⬇ 3.8%||⬇ 5.7%|
Nationally, across all four regions, pending sales have decreased 8.5% since July of 2020. The NAR has tracked pending sales since 2001.
The best way to take advantage of a more buyer-friendly market is to get financing in place before you find a home.
A preapproval* in hand makes it easier to make an offer and increases the chances of your offer being accepted.
*Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.