Pending residential property, sales in the United States increased in June following a wide swing down in April and then up in May, according to the latest data from the National Association of Realtors.
Property market activity increased in the West and South but declined in the Midwest and Northeast although all regions show strong double-digit gains from a year ago, the Pending Home Sales Index also shows.
The index, a forward looking indicator based on contract signings, increased 2.4% to 90.9 in June from 88.8 in May and is 19.8% above the 75.9 reading in June 2010, which was the low point immediately following ending of the home buyer tax credit. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, said that there may be some increase in closed existing home sales. ‘For the majority of transactions, the lag time between pending contacts to actual closings is one to two months. Therefore, the two consecutive months of rising activity should lead to overall improvement in closed sales in upcoming months,’ he explained.
‘Though a higher than normal cancellation rate can hold back final closing figures, it could well be that some past cancellations are nothing more than delayed buying decisions rather than outright cancellations,’ he added.
Yun said tight credit and economic uncertainty have been constricting the market. ‘The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy home buyers can get a mortgage,’ he said.
‘Washington also should not rock the boat with policy changes that would negatively impact affordable credit or otherwise increase the cost of buying or owning a home,’ Yun added.
The PHSI in the Northeast fell 0.4% to 68.9 in June but is 19.4% higher than June 2010. In the Midwest, the index fell 3.7% to 79.7 in June but is 26.4% above a year ago. Pending home sales in the South increased 4.4% to an index of 99.2 and are 19.1% higher than June 2010. In the West, the index was up 6.4% to 107.0 in June and is 16.4% above a year ago.
According to NAR existing home sales this year are expected to total five million, slightly higher than 2010. Similarly, little change is forecast for aggregate home prices with several indicators, including NAR’s median prices, showing recent signs of stabilization.