Pending home sales inched up 0.3% in June compared with May but were down 15.6% compared with June 2022, according to the National Association of Realtors.
It was the first month-over-month increase since February – but home sales volume has slowed to a trickle over the past year due to higher mortgage rates, rising home prices and lack of inventory.
Month-over-month, contract signings increased 0.6% in the Northeast and 4.3% in the Midwest, but fell 1.4% in the South and 1.0% in the West.
Year-over-year, all four regions saw pending home sales decrease.
“The recovery has not taken place, but the housing recession is over,” says Lawrence Yun, chief economist for NAR, in a statement. “The presence of multiple offers implies that housing demand is not being satisfied due to lack of supply. Homebuilders are ramping up production and hiring workers.”
Currently, NAR forecasts that the average 30-year fixed mortgage rate will hit 6.4% this year and then decline to 6.0% in 2024, while the unemployment rate will rise slightly to 3.7% in 2023 before increasing to 4.1% in 2024.
“With consumer price inflation calming close to the Federal Reserve’s desired conditions, mortgage rates look to have topped out,” Yun says. “Given the ongoing job additions, any meaningful decline in mortgage rates could lead to a rush of buyers later in the year and into the next.”
NAR expects existing-home sales to decrease 12.9% from 2022 to 2023, settling at 4.38 million, before climbing 15.5%, to 5.06 million in 2024.
Compared to last year, national median existing-home prices will remain steady – declining 0.4%, to $384,900, before rebounding by 2.6% next year, to $395,000.
The West – the country’s most expensive region – will see reduced prices while the more affordable Midwest region is likely to see a small, positive increase.
Housing starts will drop 5.3% from 2022 to 2023, to 1.47 million, before increasing to 1.55 million, or 5.4%, in 2024.
“It is critical to expand supply as much as possible to widen access to homebuying for more Americans,” Yun says. “Home prices will be influenced by how much inventory is brought to market. Increased homebuilding will tame price growth, while limited construction will lead to home price appreciation outpacing income growth.”
Photo: Breno Assis