Contracts Flicker in June, but Pending Sales Still Underwhelm Year-Over-Year
With an 0.9 percent gain month-over-month, June pending sales slightly sparked, according to the National Association of REALTORS® (NAR) Pending Home Sales Index (PHSI)—but, on an annual basis, contracts still underwhelmed, down 2.5 percent.
From May to June, activity increased in all of the regions in the U.S.: 0.5 percent in the Midwest; 1.4 percent in the Northeast; 1.1 percent in the South; and 0.7 percent in the West. However—in line with the nation’s overall trend—activity was subdued year-over-year, down 2.1 percent in the Midwest, 4.1 percent in the Northeast, 0.3 percent in the South, and 5.6 percent in the West.
“After two straight months of pending sales declines, home shoppers in a majority of markets had a little more success finding a home to buy last month,” says Lawrence Yun, chief economist at NAR. “The positive forces of faster economic growth and steady hiring are being met by the negative forces of higher home prices and mortgage rates. Even with slightly more homeowners putting their home on the market, inventory is still subpar and not meeting demand. As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.
“Home price growth remains swift and listings are still going under contract at a robust pace in most of the country, which indicates that even with rising inventory in many markets, demand still significantly outpaces what’s available for sale,” Yun says. “However, if this trend of increasing supply continues in the months ahead, prospective buyers will hopefully begin to see more choices and softer price growth.”
“We continue to forecast home sales trending just below last year’s levels,” said Ruben Gonzalez, chief economist at Keller Williams, in a statement. “The year-over-year increase in inventory we saw in June may provide a boost to sales at the end of the summer as the trend holds. At the moment, we don’t see it as enough to bring us up above 2017 home sales levels. The economic conditions underpinning demand are holding strong, and supply is the primary factor holding back sales right now.”