NAR: Pending Home Sales Slip 2.6% in June
Pending home sales continued downward in June, according to the National Association of Realtors (NAR), with near-term sales expected to be notably lower than the spring. After experiencing a staggering drop in May after the expiration of the tax credit offer for homebuyer, NAR's pending home sales index decreased to a reading of 75.7 in June, down 2.6% from May. An index of 100 is equal to the average level of contract activity during 2001. The index is a forward-looking indicator of future existing home sales based on signed sales contracts. The index is 18.6% elow its June 2009 level. NAR chief economist Lawrence Yun said lower home sales are expected in the short term with mortgage rates staying near historically low amounts. “Over the short term, inventory will look high relative to home sales," Yun said. "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.” Yun believes home sales could pick up later in the year if employment opportunities increase, but says he only predicts modest growth in the job market. “We really need to see stronger job creation to have a meaningful recovery in the housing markets,” he added. Regionally, only pending sales in the South rose during June, up 3.7%; however, home sales in this region are below June 2009 by 13.3%. Pending sales in the Northeast dropped 12.2%, 25.4% lower than June 2009. In the West, pending sales slipped 0.2% and are 14.2% below a year ago. The Midwest experienced a 9.5% decrease to 64.1% in pending sales, putting the index 27.8% lower than its level in June 2009. Write to Christine Ricciardi.