According to the National Association of Realtors (NAR), pending home sales ticked upward 0.3% in June from the prior month. All four U.S. regions saw year-over-year declines in transactions. Sales increased month over month in the Northeast and Midwest, while the South and West experienced losses compared with May.
“The recovery has not taken place, but the housing recession is over,” says NAR chief economist Lawrence Yun. “The presence of multiple offers implies that housing demand is not being satisfied due to lack of supply. Home builders are ramping up production and hiring workers.”
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, grew 0.3% to 76.8 from May. Pending transactions fell by 15.6% year over year. A PHSI reading of 100 is equal to the level of contract activity in 2001, NAR says.
“It is critical to expand supply as much as possible to widen access to home buying for more Americans,” Yun says. “Home prices will be influenced by how much inventory is brought to market. Increased home building will tame price growth, while limited construction will lead to home price appreciation outpacing income growth.”
NAR expects existing-home sales to decrease 12.9% from 2022 to 2023, settling at 4.38 million, before climbing 15.5% to 5.06 million in 2024. Compared with last year, national median existing-home prices will remain steady, declining 0.4% to $384,900, before rebounding by 2.6% next year to $395,000.
Predictions also state that the West will see reduced prices, while the Midwest is likely to see a slight positive increase. Housing starts will drop 5.3% from 2022 to 2023 to 1.47 million, before increasing to 1.55 million, or 5.4%, in 2024, NAR suggests.
In June, the Northeast PHSI increased 0.6% from May to 67.1, a decrease of 16.7% from one year ago. The Midwest index rose 4.3% to 77.6 in June, down 17.1% from one year ago. The South PHSI decreased 1.4% to 93.3 in June, falling 14.3% from June 2022. The West index dropped 1% in June to 57.7.
“June is usually prime home buying season, so normally we’d expect a stronger showing. But given the affordability and inventory challenges currently faced by buyers, any improvement is notable,” says Kate Wood, home and mortgage expert, NerdWallet. “An increase in the inventory of new and existing homes, lower mortgage interest rates, or, ideally, both, is needed to spur buyer activity.”
