Pending Home Sales Slip; Drop Most in South, Midwest

The National Association of Realtors (NAR) Monday morning released its data on pending sales of existing homes for June. The pending home sales index fell 1.8% to 110.3. Prior to today’s report the index had risen for five consecutive months. The June reading the third highest for 2015 to date and is 8.2% higher than the June 2014 reading.

The consensus estimate called for a month-over-month increase of 1% in pending sales. The index reflects signed contracts, not sales closings. An index reading of 100 equals the average level of contract signings during 2001.

The index has been above 100 (the “average” reading) for 10 straight months.

The NAR’s chief economist noted:

Competition for existing houses on the market remained stiff last month, as low inventories in many markets reduced choices and pushed prices above some buyers’ comfort level. The demand is there for more sales, but the determining factor will be whether or not some of these buyers decide to hold off even longer until supply improves and price growth slows. … Strong price appreciation and an improving economy is finally giving some homeowners the incentive and financial capability to sell and trade up or down. Unfortunately, because nearly all of these sellers are likely buying another home, there isn’t a net increase in inventory. A combination of homebuilders ramping up construction and even more homeowners listing their properties on the market is needed to tame price growth and give all buyers more options.

By region, home sales increased by 0.4% to an index score of 94.3 in the Northeast and is 12% higher than in June of 2014. Sales rose 0.5% in the West to an index score of 104.4, up 10.4% over last year.

Sales slipped 3% in the Midwest to an index of 108.1, still 5% higher than a year ago. In the South, sales also dropped 3% to an index score of 123.5, up 7.8% over a year ago.

The national median existing-home price for all housing types in 2015 is expected to increase around 6.5 percent to $221,900, which would match the record high set in 2006. Total existing-home sales this year are forecast to increase 6.6 percent to around 5.27 million, about 25 percent below the prior peak set in 2005 (7.08 million).

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