Pending home sales remained roughly unchanged in June, standing at a seasonally adjusted annual rate of 111, up 0.2% month-over-month and up 1% year-over-year, according to a Wednesday release from the National Association of Realtors (NAR).
June’s result is the second highest score in the past 12 months, but still falls four points lower than the highest reading of 115 this past April, a sign of cooling after the end of spring selling season. The pending home sales index, based on signed real estate contracts for existing single-family homes, is a key tool to measure the housing contract activity and to predict future existing home sales in one or two months ahead.
“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,” said NAR chief economist Lawrence Yun in a statement.
June's result is mostly driven up by the noticeable gain posted in the Northeast, which saw a 3.2% month-over-month and 1.7% year-over-year increase in pending home sales. Followed behind is the Midwest region, up 0.8% growth month-over-month and up 1.6% year-over-year. Pending home sales went down -0.6% in the South and down -1.3% in the West respectively in the month ended in June.
Mortgage rates lingered near all-time lows through most of the month, but Yun warns that customers are finding it hard to take advantage of rates, largely because of restricted housing inventory.
“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.” Yun said. “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."
Judging from the current pace, Yun expected this year's existing sales to easily surpass last year and snag the highest annual pace since 2006 to 5,44 million, a 3.6% rise from 2015. The national median price for existing homes, meanwhile, would be likely to grow at a steady pace of 4%.
Read the full release here>>
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