NAR: Pending home sales slip in June
WASHINGTON – July 28, 2014 – After three consecutive months of solid gains, pending home sales slowed modestly in June, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, declined 1.1 percent to 102.7 in June from 103.8 in May – 7.3 percent below June 2013 (110.8).
Despite June's decrease, the index is above 100 – considered an average level of contract activity – for the second consecutive month after failing to reach that mark since November 2013 (100.7).
"Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved," says Lawrence Yun, NAR chief economist. "However, supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates."
Despite the headwinds, Yun ultimately expects a slight uptick in sales during the second half of the year.
"The good news is that price appreciation has decreased to its slowest pace since March 2012 behind much needed increases in inventory," he says. "With rents rising 4 percent annually, potential buyers are less likely to experience sticker shock and can make smart decisions on whether or not it makes sense to buy or continue renting."
The PHSI in the Northeast fell 2.9 percent to 83.8 in June, 3.2 percent below a year ago. In the Midwest, the index rose 1.1 percent to 106.6, but it remains 5.5 percent below June 2013.
Pending home sales in the South dipped 2.4 percent to an index of 113.8 in June, 4.3 percent below a year ago. The index in the West inched up 0.2 percent in June to 95.7, but it remains 16.7 percent below June 2013.
Yun forecasts existing-homes sales to be down 2.8 percent this year to 4.95 million, compared to 5.1 million sales of existing homes in 2013. The national median existing-home price is projected to grow between 5 and 6 percent this year and in 2015.
© 2014 Florida Realtors®