U.S. Pending Home Sales Up 10%
For the 26th consecutive month, pending home sales in the United States were up over the same time a year ago in June, according to the National Association of Realtors (NAR).
NAR’s Pending Home Sales Index, which reflects contracts for home sales, was 110.9 in June, up 10.9 percent from a year before, when it was 100.
The index ticked down from May’s reading of 111.3, when pending sales were the highest since December 2006.
NAR Chief Economist Lawrence Yun pointed to higher home prices and interest rates as starting to affect affordability, especially in high-cost regions.
“Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June,” he said. “The persistent lack of inventory also is contributing to lower contract signings.”
Changing interest rates are key, because they are a factor in some contracts not going to closing, Yun noted.
“There are some homebuyers who sign contracts with strong lender commitment letters, but have floating mortgage interest rates. Those rates can be locked as late as 10 to 14 days before closing, so some homebuyers may change their minds if the rate rises too much, which apparently happened with some sales scheduled to close in June,” he said. “Closed sales may edge down a bit in the months ahead, but they’ll stay above year-ago levels.”
In the Northeast, the index remained unchanged from May at 87.2, but is 12.2 percent higher than a year ago and the lowest of the four regions in the country. The index was up over last year in all regions, but fell from May in the South and Midwest and rose in the West.
NAR said stable contract signings are expected for the rest of the year with existing-home sales projected to rise more than 8 percent this year. Median prices are expected to increase nearly 11 percent due to inventory shortages, NAR said.
WATCH: NAR Director of Communications, T.J. Doyle, and Chief Economist Lawrence Yun discuss June's pending home sales data.
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