Pending home sales increased in all four major regions in June, though overall activity lagged year-ago levels for the sixth straight month, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index – a forward-looking indicator based on contract signings – rose 0.9 percent to 106.9 in June from May’s 105.9. Despite last month’s increase, contract signings are still down 2.5 percent on an annual basis.
Lawrence Yun, NAR chief economist, says an uptick in existing inventory helped lift contract signings in June.
“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,” Yun says. “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.”
The good news according to Yun: It’s possible the worst of the supply crunch affecting most of the country has passed.
Last month, existing inventory was up on an annual basis – albeit slightly – for the first time in three years. Furthermore, several large metro areas saw big jumps in active listings year-over-year, according to realtor.com data, including Portland, Oregon (24 percent), Providence, Rhode Island (20 percent), Seattle (19 percent), Nashville, Tennessee (17 percent) and San Jose, California (15 percent).
“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,” says Yun. “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.”
Heading into the second half of the year, Yun now forecasts for existing-home sales in 2018 to decrease 1.0 percent to 5.46 million – down from 5.51 million in 2017. The national median existing-home price is expected to increase around 5.0 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.7 percent.
The PHSI in the Northeast increased 1.4 percent to 93.7 in June but is still 4.1 percent below a year ago. In the Midwest, the index rose 0.5 percent to 101.9 in June but is still 2.1 percent lower than June 2017.
Pending home sales in the South climbed 1.1 percent to an index of 124.2 in June but are 0.3 percent below a year ago. The index in the West inched forward 0.7 percent in June to 95.4 but is 5.6 percent below a year ago.
© 2018 Florida Realtors®