Pending home sales edged down with near-term sales expected to be notably lower in contrast to the spring surge when buyers rushed to take advantage of the home buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator, declined 2.6 percent to 75.7 based on contracts signed in June from an upwardly revised level of 77.7 in May, and is 18.6 percent below June 2009 when it was 93.0. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said lower home sales are expected in the short term. “There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,” he said. “Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices.”
Economists say the government incentives prompted many buyers who might have signed contracts during May and June to move their purchases up. That’s one reason for the sharp decline.
But they also point to the growing inventory of unsold homes on the market. It has risen to almost 4 million. That’s nearly a nine-month supply at the current sales pace, the highest level since August. It compares with a healthy level of about six months. And that doesn’t include millions of foreclosed homes that have yet to go onto the market.
“There’s too much supply for the demand that’s there,” said Michael Feder, chief executive of Radar Logic Inc., which tracks the housing market. “That’s not a dynamic in which values go up.”
The information for this post was gathered from Realtor.org and Yahoo Finance.
A survey conducted by MacroMarkets LLC suggests home prices will decline.
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