Pending home sales slow

Pending home sales slowed unexpectedly in June amid a tight housing inventory, after five straight months of increases.

The National Association of Realtors (NAR) said Wednesday that its Pending Home Sales Index, which is based on contract signings, fell 1.8 percent to 110.3 in June. It remains 8.2 percent above the June 2014 level.

{mosads}Lawrence Yun, the NAR chief economist, said that although pending sales decreased, the overall trend in the past few months supports a solid pace of home sales this summer. 

“Competition for existing houses on the market remained stiff last month, as low inventories in many markets reduced choices and pushed prices above some buyers’ comfort level,” Yun said. 

“The demand is there for more sales, but the determining factor will be whether or not some of these buyers decide to hold off even longer until supply improves and price growth slows,” he said. 

Despite the drop, the index is the third-highest reading of the year and has increased year-over-year for 10 consecutive months.

Affordability is going to play a role in the housing market’s continued recovery, with fewer homes on the market pushing prices upward, according to Selma Hepp, Trulia’s chief economist.

Increased hiring, an improving economy and price appreciation has helped spur homeowners to sell their homes. 

“Unfortunately, because nearly all of these sellers are likely buying another home, there isn’t a net increase in inventory,” Yun said. 

“A combination of homebuilders ramping up construction and even more homeowners listing their properties on the market is needed to tame price growth and give all buyers more options,” he said. 

The median existing-home price for all housing types this year is expected to increase by about 6.5 percent to $221,900, which would match the record high set in 2006. 

Regionally, modest gains in the Northeast and West were offset by larger drops in the Midwest and South.

Overall, total existing-home sales this year are forecast to increase 6.6 percent to around 5.27 million, about 25 percent below the prior peak set in 2005 when sales eclipsed 7 million.