The National Association of Realtors® (NAR) is reporting that their Pending Homes Sales Index (PHSI) — which is based on signed real estate contracts, not actual closings, for existing single-family homes, condos, and co-ops — declined -1.9% to a reading of 112.8 in June. This after recording a notable 8.0% increase in May. Year-over-year, signings were -1.9% lower. An index of 100 is equal to the level of contract activity in 2001.
In remarks prepared for the release of the PHSI, Lawrence Yun, NAR’s chief economist said, “Pending sales have seesawed since January, indicating a turning point for the market. Buyers are still interested and want to own a home, but record-high home prices are causing some to retreat.” Yun went onto say, “The moderate slowdown in sales is largely due to the huge spike in home prices. The Midwest region offers the most affordable costs for a home and hence that region has seen better sales activity compared to other areas in recent months.”
According to Yun, the 30-year fixed mortgage rate is likely to increase to 3.3% by the end of the year and will average 3.6% in 2022. With the slight uptick in mortgage rates, he expects existing-home sales to marginally decline to 5.99 million (6 million in 2021). Yun added that, with demand easing and housing starts improving to 1.65 million (1.565 in 2021), existing-home sales prices are expected to increase at a slower pace of 4.4% in 2022 (14.1% in 2021) to a median of $353,500.
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Pending Home Sales Fall 1.9% in June