Pending home sales slide
According to the National Association of Realtors (NAR), pending home sales (contracts signed) dropped 1.3 percent in July, and we anticipate they will continue to slide after many consecutive weeks of mortgage applications declining. NAR cites higher mortgage interest rates as slowing the market.
As pending home sales dip, so too will contract closings in coming months. The decline is, however, not a dramatic plummeting, just a small dip and regardless of the retrogression, pending sales have stayed above year-ago levels for the past 27 months.
Uneven pattern across the nation
Dr. Lawrence Yun, NAR chief economist, said there is an uneven pattern around the country. “The modest decline in sales is not yet concerning, and contract activity remains elevated with the South and Midwest showing no measurable slowdown. However, higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West.”
“More homes clearly need to built in the West to relieve price pressure, or the region could soon face pronounced affordability problems,” Dr. Yun added.
Regional performance varied
Pendhing home sales in the Northeast fell 6.5 percent to 81.5 in July but is 3.3 percent higher than a year ago.
In the Midwest the index slipped 1.0 percent to 113.2 in July but is 14.5 percent above July 2012.
Pending home sales in the South rose 2.6 percent to an index of 121.5 in July and are 7.7 percent higher than a year ago.
The index in the West fell 4.9 percent in July to 108.6, and is 0.4 percent below July 2012.
NAR’s crystal ball
NAR projects existing-home sales to increase 10 percent for all of 2013, totaling about 5.1 million, and reach approximately 5.2 million next year.
With ongoing supply imbalances, the national median existing-home price is expected to grow nearly 11 percent this year, and moderate to a gain of 5 to 6 percent in 2014, with rising construction taking some of the pressure off of home prices.