Pending home sales climbed in all four major regions in June, but still fell short of last year's gains, 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 by 0.9 % in June to 106.9, up from 105.9 in May. With June’s increase, the index is up 2.5%.
“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,” NAR Chief Economist Lawrence Yun said.
Yun also said that an uptick in existing inventory was responsible for helping lift contract signings in June.
“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,” Yun added. “As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.”
Yun believes the worst of the supply crunch affecting most of the country has possibly passed.
Yun forecasts existing home sales will decrease 5.46 million in 2018, a decrease from 5.51 million in 2017. The national median existing home price, he predicts, will increase about 5% in 2018. For comparison, existing home sales increased 1.1% in 2017 while prices rose 5.7%.
“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,” Yun concluded.
The PHSI in the Northeast increased 1.4% to 93.7 in June but is 4.1% lower than 2017. The Midwest index increased by 0.5% at 101.9 but is still 2.1% lower than this time last year.
Lastly, pending home sales in the South climbed 1.1% to a 124.2 but is still 0.3% below 2017. The index in the West modestly increased 0.7% to 95.4 and is 5.6% below 2017.