After five consecutive months of increases, pending home sales reversed course and dropped in June, a slight ease to what has been a red-hot housing market, according to the National Association of REALTORS®’ Pending Home Sales Index, a forward-looking indicator based on contract signings.
June’s pending home sales, however, remained near May’s level, which was the highest in more than nine years. Pending home sales showed slight gains in the Northeast and West, but were offset by larger declines in the Midwest and South, NAR reports.
NAR’s Pending Home Sales index nationwide dropped 1.8 percent to 110.3 in June; it is still 8.2 percent above year ago levels.
Here’s how the Pending Home Sales Index fared across the country in June:
- Northeast: pending home sales rose 0.4 percent to 94.3 in June and are 12 percent above year ago levels.
- Midwest: pending home sales dropped 3 percent to 108.1 in June but remain 5 percent above June 2014.
- South: pending home sales fell 3 percent to 123.5 but are still 7.8 percent above a year ago.
- West: pending home sales rose 0.5 percent in June to 104.4 and are 10.4 percent above June 2014.
Lawrence Yun, NAR’s chief economist, says that despite the dip in pending sales in June the overall trend has been a solid pace of home sales this summer.
“Competition for existing houses on the market remained stiff last month, as low inventories in many markets reduced choices and pushed prices above some buyers’ comfort level,” Yun says. “The demand is there for more sales, but the determining factor will be whether or not some of these buyers decide to hold off even longer until supply improves and price growth slows.”
The national median existing-home price for all housing types in 2015 is expected to rise about 6.5 percent to $221,900 — which would match the record high set in 2006, NAR reports. A boost in existing-home sales is coming from pent-up sellers who are now realizing equity gains, Yun adds.
“Strong price appreciation and an improving economy is finally giving some home owners the incentive and financial capability to sell and trade up or down,” says Yun. “Unfortunately, because nearly all of these sellers are likely buying another home, there isn’t a net increase in inventory. A combination of homebuilders ramping up construction and even more home owners listing their properties on the market is needed to tame price growth and give all buyers more options.”