Pending home sales returned to form in June after three straight months of backward traction, up 1.5 percent in the National Association of REALTORS® (NAR) Pending Home Sales Index (PHSI). The PHSI posted 110.2 in June, up from 108.6 in May. The Index is based on contract signings.
“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,” says Lawrence Yun, chief economist at NAR. “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.”
Three of the four major regions in the U.S. saw increases in the PHSI in June, with the Northeast up 0.7 percent to 98.0, the South up 2.1 percent to 126.0, and the West up 2.9 percent to 101.5. The Midwest saw a decrease, down 0.5 percent to 104.0.
“Low supply is an ongoing issue holding back activity,” Yun says. “Housing inventory declined last month and is a staggering 7.1 percent lower than a year ago.”
“Pending home sales rebounded in June for the first monthly increase in four months and the first annual increase since March,” says realtor.com® Chief Economist Danielle Hale. “While an increase in pending home sales suggests more home sales will be completed in the months ahead, realtor.com data on the number of homes available for sale continued to decline in June, to 11 percent below the level we saw at this time last year.
“[This] data suggests that while home shoppers are increasingly having success finding homes, realtor.com data on inventory indicates that home shoppers have few options to choose from and continue to face a challenging market,” Hale says.
A key development in existing-home sales activity in June could predicate relief for homebuyers, especially first-time buyers, according to Yun. Sales to investors—who often have an advantage over other types of buyers due to all-cash offers—treaded down to a year low in June.
“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,” says 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.”
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