The NAR Pending Homes Sales Index, a forward looking indicator based on contract signings, declined 1.3% to 109.5 in July from 110.9 in June, but is 6.7% above July 2012 Pending sales have stayed above year ago levels for the past 27 months but 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,’ he explained.
‘More homes clearly need to be built in the West to relieve price pressure, or the region could soon face pronounced affordability problems,’ he added.
The PHSI in the Northeast fell 6.5% to 81.5 in July but is 3.3% higher than a year ago. In the Midwest the index slipped 1% to 113.2 in July but is 14.5% above July 2012.
Pending home sales in the South rose 2.6% to an index of 121.5 in July and are 7.7% than a year ago while the index in the West fell 4.9% in July to 108.6 and is 0.4% below July 2012.
NAR projects existing home sales to increase 10% during 2013, totalling 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% this year, and moderate to a gain of 5 to 6% in 2014, with rising construction taking some of the pressure off of home prices.
