The National Association of Realtors (NAR) reports pending home sales decreased in June, following a slight increase in May. All four major regions posted month-over-month and year-over-year pullbacks, the largest of which occurred in the West. The Pending Home Sales Index (PHSI) dipped 8.6% to 91.0 in June. Year-over-year, transactions shrank 20%.
An index of 100 is equal to the level of contract activity in 2001.
“Contract signings to buy a home will keep tumbling down as long as mortgage rates keep climbing, as has happened this year to date,” says Lawrence Yun, NAR’s chief economist. “There are indications that mortgage rates may be topping or very close to a cyclical high in July. If so, pending contracts should also begin to stabilize.”
According to NAR, buying a home in June was about 80% more expensive than in June 2019. Nearly a quarter of buyers who purchased a home three years ago would be unable to do so now because they no longer earn the qualifying income to buy a median-priced home today.
“Home sales will be down by 13 percent in 2022, according to our latest projection,” Yun adds. “With mortgage rates expected to stabilize near 6 percent and steady job creation, home sales should start to rise by early 2023.”
The Northeast PHSI slid 6.7% compared to last month to 80.9, down 17.6% from June 2021. The Midwest index dropped 3.8% to 93.7 in June, a 13.4% decline from a year ago.
The South PHSI slipped 8.9% to 108.3 in June, a decrease of 19.2% from the previous year. The West index slumped 15.9% in June to 68.7, down 30.9% from June 2021.