July Pending Home Sales Pace Slows
Pending home sales but rose modestly for the sixth time in seven months in July, the National Association of Realtors reported yesterday.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, marginally increased by 0.5 percent to 110.9 in July from an upwardly revised 110.4 in June and is now 7.4 percent higher than a year ago (103.3). The index has increased year-over-year for 11 consecutive months and is the third highest reading of 2015, behind April (111.6) and May (112.3).
Regionally, pending home sales were mixed. In the Northeast, the index increased by 4.0 percent to 98.8 and improved by 12.1 percent above a year ago. In the Midwest, the index remained unchanged at 107.8 in July but rose by 5.7 percent from a year ago.
Pending home sales in the South increased by 0.6 percent to 124.2 and improved by 6.5 percent from a year ago. In the West, the index declined by 1.4 percent to 103.0, but improved by 7.5 percent from a year ago.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the upward trend in pending home sales further reflected the “rising tide” of housing-related economic indicators, but noted the report reflected activity prior to the recent wild swings in the financial markets and showed that existing home sales had strong momentum going into that period.
“The overall positive trend is supportive of continued gains in existing home sales,” Vitner said.
NAR Chief Economists Lawrence Yun said the housing market began the second half of 2015 on a positive note. “While demand and sales continue to be stronger than earlier this year, realtors have reported since the spring that available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust,” he said.
Looking ahead, Yun said in light of the recent volatility in the stock market, it’s possible some prospective buyers may err on the side of caution and delay decisions, while others may view real estate as a more stable asset in the current environment. “Overall, the prospects for ongoing strength in the housing market remain intact for now,” he said. “The U.S. economy is growing–albeit at a modest pace–and the labor market continues to add jobs. Uncertainty in the equity markets–even if the Fed raises short-term rates in September–could stabilize long-term mortgage rates and preserve affordability for buyers.”
