Pending Home Sales Hit a new Record-Low in June

Dennis Norman

NAR Pending Home Sales Index at Lowest Level Since Index Began in 2001

At dropping 30 percent in May as a result of the rush to buy a home before the April 30th tax credit deadline, the National Association of REALTORS Pending Home Sales Index for June shows a further decline of 2.6 percent in the index in June (seasonally adjusted) which is 18.6 percent below June 2009. While the decrease in home sales was expected, I’m a little surprised we are running so far behind last year (which, might I remind you, wasn’t that great of year for home sales?).

Here are highlights from the report:

• June’s pending home sales index (seasonally adjusted) was 75.7 (the index is based upon 100.0 being equal to the average level of sales activity in 2001 which we could call the last “normal” year) which is the lowest level the index has hit since NAR began the index in 2001.
• Junes not-seasonally adjusted index index was 92.9, a 4.4 percent increase from May and a 20.1 percent decrease from a year ago.
• All regions in the U.S. saw month-over-month and year-over-year declines in pending home sales with the exception of the South which had a 3.7 percent month-over-month gain, but a 13.3 percent year-over-year loss.

Lawrence Yun, NAR chief economist,

said lower home sales are expected in the short term. “There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,” he said. “Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices.”

Yun expects mortgage interest rates to remain historically low for the balance of the year, with very modest growth in employment. “We really need to see stronger job creation to have a meaningful recovery in the housing markets,” he added.

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