Pending Homes Sales Dip

Pending Home Sales for July dipped slightly with analysts blaming rising mortgage interest rates; this according to the National Association of Realtors® (NAR).

The NAR’s Pending Home Sales Index (PHSI) declined 1.3 percent to 109.5 in
July from 110.9 in June. This is the second monthly PHSI decline in a row after
the index reached a six-year high in May when it hit 111.3. Though July’s
numbers were down from June, they are still 6.7 percent above July 2012 when it
was 102.6. Pending sales have now stayed above year-ago levels for 27
continuous months.

The Pending Home Sales Index is a leading indicator for the housing sector, data
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. Sales are
usually finalized within one or two months of signing.

NAR chief economist Lawrence Yun, said, “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
be built in the West to relieve price pressure, or the region could soon face
pronounced affordability problems.”

By region the PHSI fell 6.5 percent in the Northeast dropping to 81.5, 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 year ago figures. In the South the PHSI
rose 2.6 percent to 121.5 for July and is 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.

Additionally the NAR is projecting “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.”

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