Pending Home Sales Take Unexpected Turn
Following three consecutive months of gains, pending home sales slipped 1.1 percent in June, the National Association of REALTORS® reports.
NAR's Pending Home Sales Index, a forward-looking indicator based on contract signings, was at 102.7 in June, down 7.3 percent from year-ago levels. Any reading above 100 on the index is considered an average level of contract activity.
Only a Temporary Dip?
The housing market is stabilizing but still facing several headwinds that are impeding full sales potential, says Lawrence Yun, NAR's chief economist.
"Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved," he says. "However, supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a high number of potential buyers from fully taking advantage of lower interest rates."
Yun expects a slight uptick in sales during the second half of the year.
"The good news is that price appreciation has decreased to its slowest pace since March 2012 behind much-needed increases in inventory," Yun notes. "With rents rising 4 percent annually, potential buyers are less likely to experience sticker shock and make smart decisions on whether or not it makes sense to buy or continue renting."
Across the country, pending home sales were mixed in June. They dropped by 2.9 percent (3.2 percent below year-ago levels) in the Northeast and by 2.4 percent (4.3 percent below year ago levels) in the South. On the other hand, pending home sales were up by 1.1 percent in the Midwest (but 5.5 percent below year-ago levels) and by 0.2 percent in the West (but 16.7 percent below year-ago levels), NAR reports.