June sees Pull-Back in Pending Sales
Pending home sales dipped slightly inrnJune, ending five straight months of increases. rnThe National Association of Realtors® (NAR) said today that pendingrnsales were down 1.8 percent from May, a month that reached the highest level onrnNAR’s Pending Home Sales Index (PHSI), 112.3, in over nine years. The PHSI wasrn110.3 in June, 8.2 percent above the June 2014 number of 101.9 and the thirdrnhighest reading this year. It was also therntenth consecutive year-over-year increase.</p
A sale is listedrnas pending when the contract has been signed but the transaction has notrnclosed. The sale is typically finalized within one or two months of signing.</p
Lawrence Yun, NAR chief economist, said that despite the Junerndip in pending sales the overall trend in recent months supports a solid pacernof home sales this summer. “Competition for existing houses on the marketrnremained stiff last month, as low inventories in many markets reduced choicesrnand pushed prices above some buyers’ comfort level,” he said. “The demand isrnthere for more sales, but the determining factor will be whether or not some ofrnthese buyers decide to hold off even longer until supply improves and pricerngrowth slows.” </p
Yun said thatrnwhile existing home sales have rising considerably from a year ago the share ofrnfirst-time buyers is only modestly improving, up from an average of 28 percent atrnthis time last year to 30 percent. The recentrnboost in sales is mostly due to pend-up demand from sellers cashing in on theirrnequity gains in recent years. </p
“Strong pricernappreciation and an improving economy is finally giving some homeowners thernincentive and financial capability to sell and trade up or down,” adds Yun.rn”Unfortunately, because nearly all of these sellers are likely buying anotherrnhome, there isn’t a net increase in inventory. A combination of homebuildersrnramping up construction and even more homeowners listing their properties onrnthe market is needed to tame price growth and give all buyers more options.” </p
Modest gains in the Northeast and Westrnwere offset by larger declines in the Midwest and South. The PHSI in the Northeast inched up 0.4 percentrnto 94.3 in June, and is now 12.0 percent above a year ago. In the Midwest thernindex declined 3.0 percent to 108.1 but remained 5.0 percent above it June 2014rnlevel. </p
Pending homernsales in the South also decreased 3.0 percent to an index of 123.5, 7.8 percentrnabove last June. The index in the West increased 0.5 percent in 104.4, arnyear-over-year increase of 10.4 percent. </p
The national median existing-home pricernfor all housing types in 2015 is expected to increase around 6.5 percent torn$221,900, which would match the record high set in 2006. Total existing-homernsales this year are forecast to increase 6.6 percent to around 5.27 million,rnabout 25 percent below the prior peak set in 2005 (7.08 million). </p
The Pending HomernSales Index is based on a large national sample, typically representing aboutrn20 percent of transactions for existing-home sales. In developing the model forrnthe index, it was demonstrated that the level of monthly sales-contractrnactivity parallels the level of closed existing-home sales in the following twornmonths. An index of 100 is equal to the average level ofrncontract activity during 2001, the first year to be examined and coincidentallyrnone that fell within the range of 5.0 to 5.5 million sales, which is consideredrnnormal for the current U.S. population.
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