Pending home sales reversed a three month slide in June, rising 1.5% to a Pending Home Sales Index of 110.2, the National Association of Realtors reported Monday. The West, South and Northeast posted gains; the Midwest was the sole region with a decline.
Year over year, the index was up 0.5%, the first annual gain since March. Additionally, May was upwardly revised to 108.6.
The PHSI in the Northeast inched forward 0.7 percent to 98.0 in June, and is now 2.9% above a year ago. In the Midwest the index decreased 0.5% to 104.0 in June, and is now 3.4% lower than June 2016. Pending home sales in the South rose 2.1% to an index of 126.0 in June and are now 2.6% above last June. The index in the West grew 2.9% in June to 101.5, but is still 1.1% below a year ago.
“The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs,” said Lawrence Yun, NAR chief economist. “Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria.”
Added Yun, “Low supply is an ongoing issue holding back activity. Housing inventory declined last month and is a staggering 7.1% lower than a year ago.”
Yun does note that there could potentially be a sliver of increased hope in the months ahead for prospective first-time buyers, who continue to struggle reaching the market. Sales to investors last month were the lowest of the year (13%), which helped push all cash transactions to 18% – the smallest share since June 2009 (13%).
“It appears the ongoing run-up in price growth in many areas and less homes for sale at bargain prices are forcing some investors to step away from the market,” said Yun. “Fewer investors paying in cash is good news as it could mean a little less competition for the homes first-time buyers can afford. However, the home search will still likely be a strenuous undertaking in coming months because supply shortages in most areas are most severe at the lower end of the market.”
Heading into the second half of the year, Yun expects existing-home sales to finish around 5.56 million, which is an increase of 2.6% from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 5%. In 2016, existing sales increased 3.8% and prices rose 5.1%.
