Pending home sales were mostly unchanged in July, but rose modestly for the sixth time in seven months, according to the National Association of REALTORS®.
The Pending Home Sales Index,a forward-looking indicator based on contract signings, marginally increased 0.5 percent to 110.9 in July from an upwardly revised 110.4 in June and is now 7.4 percent above July 2014 (103.3). The index has increased year-over-year for 11 consecutive months and is the third highest reading of 2015, behind April (111.6) and May (112.3).
Lawrence Yun, NAR chief economist, says the housing market began the second half of 2015 on a positive note, with pending sales slightly rising in July. “Led by a solid gain in the Northeast, contract activity in most of the country held steady last month, which bodes well for existing-sales to maintain their recent elevated pace to close out the summer,” he says.
“While demand and sales continue to be stronger than earlier this year, REALTORS® have reported since the spring that available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust. ”
Looking ahead, with inventory shortages likely to persist into the fall, Yun expects the national median existing-home price to increase 6.3 percent in 2015 to $221,400. Yun forecasts total existing-home sales this year to increase 7.1 percent to around 5.29 million, about 25 percent below the prior peak set in 2005 (7.08 million).
“This is a tricky time of year to assess housing trends as the market is very seasonal, and the seasonal trend varies across the country,” says realtor.com Chief Economist, Jonathan Smoke. “While momentum remains strong, we are entering a slower time of year for demand. However, the recent stock market correction has produced a gift to the housing market in the form of lower mortgage rates and a window of time before rates move up again. Equally important, credit availability is a bit wider than last year. All of these factors provide a much better venue for first-time buyers to gain more traction in coming months.”
“In light of the recent volatility in the stock market, it’s possible some prospective buyers may err on the side of caution and delay decisions, while others may view real estate as a more stable asset in the current environment,” says Yun. “Overall, the prospects for ongoing strength in the housing market remain intact for now. The U.S. economy is growing – albeit at a modest pace – and the labor market continues to add jobs.”
Adds Yun, “Uncertainty in the equity markets – even if the Fed raises short-term rates in September – could stabilize long-term mortgage rates and preserve affordability for buyers.”
The PHSI in the Northeast increased 4.0 percent to 98.8 in July, and is now 12.1 percent above a year ago. In the Midwest the index remained unchanged at 107.8 in July, and is now 5.7 percent above July 2014.
Pending home sales in the South increased slightly (0.6 percent) to an index of 124.2 in July and are now 6.5 percent above last July. The index in the West declined 1.4 percent in July to 103.0, but is still 7.5 percent above a year ago.
For more information, visit www.realtor.org.