Pending home sales broke out of a seven-month slump in May, gaining 0.7 percent. If this were baseball, we might now call it a “balk.” The National Association of Realtors® (NAR) announced this morning that its June Pending Home Sales Index (PHSI) plunged 8.6 percent. The index fell from 99.9 in May to 91.0, leaving it 20 percent lower than in June 2021. NAR said the reversal came “as escalating mortgage rates and housing prices impacted potential buyers.” The PHSI, based on new contracts for the purchase of existing residential units, is a leading indicator of closed sales of single-family houses, condominiums, and cooperative apartments over the following one to two months. An index of 100 is equal to the level of contract activity in 2001. [pendinghomesdata] “Contract signings to buy a home will keep tumbling down as long as mortgage rates keep climbing, as has happened this year to date,” said NAR Chief Economist Lawrence Yun. “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.” Analysts may have thought the May PHSI was already signaling such stabilization. Those polled by Econoday had expected the index to decline by only 1.0 percent. Trading Economics had been slightly closer to the mark with a forecast of -2.1 percent. According to NAR, buying a home in June was about 80 percent 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.
Source: Mortgage News Daily
