After falling in May, pending home sales increased in June, rising 0.9% to a score 106.9 on the National Association of Realtors’ (NAR) Pending Home Sales Index.
However, on a year-over-year basis, contract signings were down 2.5% compared with June 2017.
Regionally, monthly pending home sales increased 1.4% in the Northeast, 1.1% in the South, 0.7% in the West and 0.5% in the Midwest.
However, year-over-year pending sales were down 5.6% in the West, 4.1% in the Northeast, 2.1% in the Midwest, and 0.3% in the South.
It was the sixth consecutive month that overall activity lagged on an annual basis.
As has been the case for over a year now, lack of inventory continues to be the main obstacle to growing home sales.
“After two straight months of pending sales declines, home shoppers in a majority of markets had a little more success finding a home to buy last month,” says Lawrence Yun, chief economist for NAR, in a statement. “The positive forces of faster economic growth and steady hiring are being met by the negative forces of higher home prices and mortgage rates. Even with slightly more homeowners putting their home on the market, inventory is still subpar and not meeting demand. As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.”
However, more inventory could soon be finding its way into the pipeline: According to recent reports, inventory was up on an annual basis – albeit slightly – in June for the first time in three years.
“Home price growth remains swift and listings are still going under contract at a robust pace in most of the country, which indicates that even with rising inventory in many markets, demand still significantly outpaces what’s available for sale,” Yun says. “However, if this trend of increasing supply continues in the months ahead, prospective buyers will hopefully begin to see more choices and softer price growth.”
Heading into the second half of the year, Yun forecasts existing-home sales in 2018 to decrease 1.0% to 5.46 million – down from 5.51 million in 2017.
The national median existing-home price is expected to increase around 5.0%. In 2017, existing sales increased 1.1% and prices rose 5.7%.