Pending Home Sales Marginally Rise in June
Pending home sales were mostly unmoved in June, but did creep slightly higher as supply and affordability constraints prevented a bigger boost in activity from mortgage rates that lingered near all-time lows through most of the month, according to the National Association of Realtors®.
The Pending Home Sales Index inched 0.2 percent to 111.0 in June, which puts it at its second highest reading over the past 12 months, but is noticeably down from this year’s peak level in April.
“With only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cooldown after a very active spring,” Lawrence Yun, NAR chief economist said. “Unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6 percent from a year ago, and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth.”
Adds Yun, “Until inventory conditions markedly improve, far too many prospective buyers are likely to run into situations of either being priced out of the market or outbid on the very few properties available for sale.”
One noteworthy and positive development occurring in the housing market during the first half of the year, according to Yun, is that sales to investors have subsided from a high of 18 percent in February to a low of 11 percent in June, which is the smallest share since July 2009.
“Limited selection of homes at bargain prices is reducing the number of individual investors willing or able to buy,” adds Yun. “This will hopefully open the door for first-time buyers, who made some progress last month 3 but are still buying homes at a subpar level even as rents increase at rates not seen since before the downturn 4.”
In spite of the slight slowdown in contract signings from April’s peak high, existing-home sales this year are still expected to be around 5.44 million, a 3.6 percent boost from 2015 and the highest annual pace since 2006. After accelerating to 6.8 percent a year ago, national median existing-home price growth is forecast to slightly moderate to around 4 percent.