(Washington, DC – Insurance News and Markets) – According to the National Association of Realtors, the number of pending home sales didn’t change much, although they did increase slightly. Two factors holding back a stronger rise include supply and affordability constraints.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, inched 0.2 percent to 111.0 in June from 110.8 in May and is now 1.0 percent higher than June 2015 (109.9). With last month’s minor improvement, the index is now at its second highest reading over the past 12 months, but is noticeably down from this year’s peak level in April (115.0).
“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,” said Lawrence Yun, NAR’s Chief Economist. “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,1 and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth.”
One noteworthy and positive development occurring in the housing market during the first half of the year, according to Yun, is that sales to investors have subsided from a high of 18 percent in February to a low of 11 percent in June, which is the smallest share since July 2009 2. Yun attributes this retreat to the diminished number of distressed properties coming onto the market at any given time and the ascent in home prices, which have now risen year-over-year for 52 consecutive months.
In spite of the slight slowdown in contract signings from April’s peak high, existing-home sales this year are still expected to be around 5.44 million, a 3.6 percent boost from 2015 and the highest annual pace since 2006 (6.48 million). After accelerating to 6.8 percent a year ago, national median existing-home price growth is forecast to slightly moderate to around 4 percent.
Source: National Association of REALTORS.