In a new report, an estimated 4.8% increase was reported in June pending home sales by the National Association of REALTORS (NAR). There were gains in transactions each month in all four U.S. regions. The West had an increase year-over-year, while the Northeast, Midwest, and South saw decreases.
“The rise in housing inventory is beginning to lead to more contract signings,” said Lawrence Yun, NAR Chief Economist. “Multiple offers are less intense, and buyers are in a more favorable position.”
A measure of prospective home sales based on contract signings, the Pending Home Sales Index (PHSI) increased to 74.3 in June. Pending transactions decreased 2.6% from the previous year. The level of contract activity in 2001 is represented by an index of 100.
“Pending home sales improved 4.8% in June as mortgage rates fell through the month, dipping below 7% and continuing to fall to 6.86% by the end of the month, Hannah Jones, Sr. Economic Research Analyst at Realtor.com. “Contract signings were still down annually, however, as buyers held off in hopes of lower mortgage rates in the coming months. New home sales, which are also based on contract signings, fell just 0.6% on a monthly basis in June as already muted buyer demand was split between new home inventory and growing existing home inventory. Active listings increased 36.7% annually in June as both new and existing home inventory climbed.”
Jones added, “The persistent increase in inventory is reflected in the increase in contract signings. Though the recent pick-up in inventory is great news for buyers, active listings remain well below pre-pandemic levels, which has kept home prices elevated and has pushed many would-be buyers out of the market.”
Regional Pending Home Sales Breakdown
“The housing market continues to vary regionally, but pending home sales picked up in all four regions on a monthly basis, but remained lower than last year in most,” Jones said. “Contract signings increased monthly by 6.3% in the South, 4.7% in the Midwest, 3.4% in the West and 3.0% in the Northeast. Despite positive monthly performance, three of the four regions saw pending home sales fall annually. The seasonally adjusted annual rate of contract signings decreased 3.9% in the South, 4.2% in the Midwest, and 0.3% in the Northeast while increasing 1.0% in the West, year-over-year.”
- The Northeast PHSI decreased by 0.3% from June 2023 to 65.5, an increase of 3.0% from the previous month. The Midwest index decreased 4.2% from a year ago in June, rising 4.7% to 73.7.
- In June, the South PHSI rose 6.3% to 89.3, a decrease of 3.9% from the previous year. June saw a 3.4% increase in the West index to 58.4, up 1.0% from June 2023.
“Even more inventory is expected to come onto the housing market in the upcoming months ahead of the normal, seasonal declines in the winter,” Yun said. “The Northeast’s small gain in contract signings is due to the ongoing housing shortage situation in that region, leading to stronger home price gains. It is a good time to list.”
A Rebound in Pending Home Sales May be Fleeting
“After two consecutive months of declines, pending home sales rebounded slightly in June, increasing 4.8% over May,” said Odeta Kushi, Deputy Chief Economist at First American. “In fact, all four regions of the U.S. posted monthly gains in transactions. Mortgage rates declined by 14 basis points in June, while inventory picked up, bringing some buyers off the sidelines.”
Kushi added, “Purchase mortgage applications, another leading indicator of sales activity, also picked up in June, but have since slid in July. Buyers are still feeling very cautious, and affordability remains constrained. Mortgage rates remain in the high 6’s and house prices continue to reach new heights nationally. The payment-to-paycheck calculation still doesn’t pencil out for a lot of buyers.”
To read the full report, including more data, charts, and methodology, click here.
