Pending home sales reversed course with an increase in June, according to the latest report from the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 1.5% in June to 110.2, up from the upwardly revised 108.6 in May. This revision means last month, the index increased annually for the first time since March.
“The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs,” NAR Chief Economist Lawrence Yun said. “Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria.”
“Low supply is an ongoing issue holding back activity,” Yun said. “Housing inventory declined last month and is a staggering 7.1% lower than a year ago.”
However, homebuyers are seeing less competition as sales to investors stood at their lowest point this year in June, making up 13% of total sales. This pushed all-cash transactions to 18%, the smallest share since June 2009’s 13%.
“It appears the ongoing run-up in price growth in many areas and less homes for sale at bargain prices are forcing some investors to step away from the market,” Yun said. “Fewer investors paying in cash is good news as it could mean a little less competition for the homes first-time buyers can afford.”
“However, the home search will still likely be a strenuous undertaking in coming months because supply shortages in most areas are most severe at the lower end of the market,” he said.
NAR predicts existing home sales will come in at about 5.56 million this year, an increase of 2.6% from last year’s 5.45 million. The national median existing-home price is expected to increase 5%, down from last year’s increase of 5.1%.
Regionally, the PHSI increased in three out of four areas: The Northeast increased 0.7% to 98, the South increased 2.1% to 126 and the West increased 2.9% to 101.5 in June. However, the index in the Midwest dropped 0.5% to 104 during the same period.