The Pending Home Sales Index, a forward-looking indicator based on contract signings, inched 0.2% to 111.0 in June from 110.8 in May and is now 1.0% higher than June 2015 (109.9). With last month’s minor improvement, the index is now at its second highest reading over the past 12 months, but is noticeably down from this year’s peak level in April (115.0).

Lawrence Yun, NAR chief economist, said a solid bump in activity in the Northeast pulled up pending sales modestly in June. “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,” he 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% from a year ago,1 and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth.”

Added 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% in February to a low of 11% in June, which is the smallest share since July 20092. Yun attributes this retreat to the diminished number of distressed properties coming onto the market at any given time and the ascent in home prices, which have now risen year-over-year for 52 consecutive months.

“Limited selection of homes at bargain prices is reducing the number of individual investors willing or able to buy,” said Yun. “This will hopefully open the door for first-time buyers, who made some progress last month but are still buying homes at a subpar level even as rents increase at rates not seen since before the downturn.”

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% boost from 2015 and the highest annual pace since 2006 (6.48 million). After accelerating to 6.8% a year ago, national median existing-home price growth is forecast to slightly moderate to around 4%.

The PHSI in the Northeast advanced 3.2% to 96.0 in June, and is now 1.7% above a year ago. In the Midwest the index increased 0.8% to 108.9 in June, and is now 1.6% higher than June 2015. Pending home sales in the South decreased modestly (0.6%) to an index of 125.9 in June but are still 1.8% higher than last June. The index in the West declined 1.3% in June to 101.3, and is now 1.8% below a year ago.