Pending home sales cool down again
Pending home sales declined for the second consecutive month in July, and for the eighth time in the last nine months, the National Association of Realtors (NAR) reported this morning.
The Pending Home Sales Index (PHSI), dipped 1.0% to 89.8 in July. Year-over-year, pending transactions sank 19.9%.
The PHSI is a forward-looking indicator of home sales based on contract signings. An index of 100 is equal to the level of contract activity in 2001.
“In terms of the current housing cycle, we may be at or close to the bottom in contract signings,” said NAR Chief Economist Lawrence Yun. “This month’s very modest decline reflects the recent retreat in mortgage rates. Inventories are growing for homes in the upper price ranges, but limited supply at lower price points is hindering transaction activity.”
In June, housing affordability plummeted to its lowest level since 1989, according to NAR.
Accounting for a 30-year fixed-rate mortgage and a 20% down payment, the monthly mortgage payment on a typical home jumped to $1,944, an increase of 54%, or $679, from one year ago.
“Home prices are still rising by double-digit percentages year-over-year, but annual price appreciation should moderate to the typical rate of 5% by the end of this year and into 2023,” Yun added. “With mortgage rates expected to stabilize near 6% alongside steady job creation, home sales should start to rise by early next year.”
Pending Home Sales Regional Breakdown:
- In the Northeast, the PHSI dipped 1.9% from last month to 79.3, down 15.4% from July 2021.
- The Midwest index retracted 2.7% to 91.2 in July, a 13.4% decline from a year ago.
- The South PHSI decreased 1.1% to 106.6 in July, a pullback of 20.0% from the previous year.
- In the West, the index increased 2.2% in July to 70.0, down 30.1% from July 2021.
Click here for more information about the latest PHSI from the NAR.
