Pending home sales dipped 1.1% in June compared to May and were down 7.3% compared to May 2013, according to the National Association of Realtors' (NAR) Pending Home Sales Index.
The dip comes after three consecutive months of increases – however, as has been seen historically, an increase in pending home sales in any given month does not necessarily translate into a comparable increase in home sales in subsequent months.
‘Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved,’ says Lawrence Yun, chief economist for NAR, in a release. ‘However, supply shortages still exist in parts of the country, wages are flat and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates.’
Despite these challenges, Yun predicts a slight uptick in sales during the second half of the year.
‘The good news is that price appreciation has decreased to its slowest pace since March 2012 behind much needed increases in inventory,’ he says. ‘With rents rising 4 percent annually, potential buyers are less likely to experience sticker shock and can make smart decisions on whether or not it makes sense to buy or continue renting.’
Pending home sales fell 2.9% in the Northeast but are still 3.2% below where they were a year ago for the region. In the Midwest, they rose 1.1% but remain 5.5% below that of June 2013.
Pending home sales in the South dipped 2.4%, which is 4.3% below that of a year ago. In the West, they inched up 0.2% but remain 16.7% below that of June 2013.
Yun forecasts existing-homes sales to be down 2.8% this year to 4.95 million, compared to 5.1 million sales of existing homes in 2013.
The national median existing-home price is projected to grow between 5% and 6% this year and in 2015. The median existing-home price for all housing types in June was $223,300 – 4.3% above June 2013. This is the slowest increase since March 2012 (3.1%), NAR notes.
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