June Pending Home Sales Up Slightly

June pending home sales edged up only slightly June as mortgage rates continued to hold near record lows, the National Association of Realtors reported yesterday.

The Pending Home Sales Index rose by 0.2 percent to 111.0 in June from 110.8 in May and is now 1.0 percent higher than a year ago (109.9), reaching its second-highest reading over the past 12 months, but down from its most recent peak in April (115.0).

Regionally, pending home sales in the South decreased modestly (0.6 percent) to 125.9 in June but was1.8 percent higher than last June. The West declined 1.3 percent from May to 101.3 and by 1.8 percent from a year ago. The Northeast increased by 3.2 percent from May to 96.0 by 1.7 percent from a year ago. In the Midwest the index increased by 0.8 percent from May to 108.9 and by 1.6 percent higher from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said while month-to-month numbers can be volatile, the pending home sales index is up 1.0 percent on a year-over-year basis. “The strengthening trend in the PHSI suggests further gains in existing sales,” he said.

NAR Chief Economist Lawrence Yun noted with only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cooldown after a very active spring.

“Unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6 percent from a year ago, and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth,” Yun said. “Until inventory conditions markedly improve, far too many prospective buyers are likely to run into situations of either being priced out of the market or outbid on the very few properties available for sale.”