Pending home sales decline in July
Following two consecutive months of gains, pending home sales fell in July, according to the National Association of Realtors.
The Pending Home Sales Index (PHSI), decreased 2.5% to 105.6 in July, down from 108.3 in June. Year-over-year contract signings fell 0.3%, doing an about-face of the prior month’s increase. The PHSI is a forward-looking indicator based on contract signings.
“Super-low mortgage rates have not yet consistently pulled buyers back into the market,” said Lawrence Yun, NAR chief economist. “Economic uncertainty is no doubt holding back some potential demand, but what is desperately needed is more supply of moderately priced homes.”
Pending home sales in the South decreased 2.4% to an index of 122.7 in July, but that number is 0.1% higher than last July. The index in the West declined 3.4% in July to 93.5 but still increased 0.3% above a year ago.
Yun said that he expects GDP growth to ease to 2.0% in 2019 and 1.6% in 2020, but growth predictions are somewhat uncertain due to trade tensions.
With slower economic growth, interest rates will remain low. Though home sales will get a short term boost from lower mortgage rates, existing-home sales are likely to be flat at 5.34 million in 2019 given the level of sales in the first seven months of the year.
Housing inventory is already tight and the median price of existing-home sales will continue increasing, but at a slower pace of 4% in 2019, to $269,000, and 3% in 2020, to $278,500, the NAR said.
“A boost to home building would greatly improve economic growth,” Yun said. “More free-market prices on construction materials without government interference about where home builders have to get their supply will also help produce more and grow the economy. The housing industry cannot grow without more supply.”
The PHSI is based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The Pending Home Sales Index (PHSI), decreased 2.5% to 105.6 in July, down from 108.3 in June. Year-over-year contract signings fell 0.3%, doing an about-face of the prior month’s increase. The PHSI is a forward-looking indicator based on contract signings.
“Super-low mortgage rates have not yet consistently pulled buyers back into the market,” said Lawrence Yun, NAR chief economist. “Economic uncertainty is no doubt holding back some potential demand, but what is desperately needed is more supply of moderately priced homes.”
The PHSI in the Northeast fell 1.6% to 93.0 in July and is now 0.9% lower than a year ago. In the Midwest, the index dropped 2.5% to 101.0 in July, 1.2% less than July 2018.
Pending home sales in the South decreased 2.4% to an index of 122.7 in July, but that number is 0.1% higher than last July. The index in the West declined 3.4% in July to 93.5 but still increased 0.3% above a year ago.
Yun said that he expects GDP growth to ease to 2.0% in 2019 and 1.6% in 2020, but growth predictions are somewhat uncertain due to trade tensions.
With slower economic growth, interest rates will remain low. Though home sales will get a short term boost from lower mortgage rates, existing-home sales are likely to be flat at 5.34 million in 2019 given the level of sales in the first seven months of the year.
Housing inventory is already tight and the median price of existing-home sales will continue increasing, but at a slower pace of 4% in 2019, to $269,000, and 3% in 2020, to $278,500, the NAR said.
“A boost to home building would greatly improve economic growth,” Yun said. “More free-market prices on construction materials without government interference about where home builders have to get their supply will also help produce more and grow the economy. The housing industry cannot grow without more supply.”
The PHSI is based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.