Following New Home Sales rebound to their highest since 2008, amid record high prices, Pending Home Sales disappointed with a mere 0.2% MoM rise (versus +1.2% expectations) showing very little bounce off May’s tumble. Northeast sales saved the day with a 3.2% surge but The South and West both continued to slide. As NAR’s Larry Yun noted however: “home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth.”
Diverging fortunes…
Regional breakdown suggests price is starting to have an impact:
- Northeast up 3.2%; May fell 5.3%
- Midwest up 0.8%; May fell 4.2%
- South fell 0.6%; May fell 3.1%
- West fell 1.3%; May fell 3.4%
Lawrence Yun, NAR chief economist, says a solid bump in activity in the Northeast pulled up pending sales modestly in June.
“With only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cooldown after a very active spring,” he said. “Unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6 percent from a year ago, and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth.“
Adds Yun, “Until inventory conditions markedly improve, far too many prospective buyers are likely to run into situations of either being priced out of the market or outbid on the very few properties available for sale.”
As Bloomberg summarizes, the leveling off in pending home sales comes on the heels of reports showing existing-home sales jumped in June to its highest level since 2007 and the strongest new-home demand in eight years. The Realtor’s group said last week that sales have probably peaked for the year as prospective buyers don’t have enough homes from which to choose, forcing up property values. That’s mitigated the positive influence of mortgage rates that are close to record lows. Keep an eye on the pending home sales figure, since buyer traffic has slowed in recent weeks, the real-estate agents’ group said last week.
Charts: Bloomberg
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