The anticipated boost of more buyers signing the dotted line did not come to fruition in June despite mortgage rates near all-time lows.
Pulled higher mostly by a solid rise in the Northeast, pending home sales last month only squeaked out a small gain (0.2 percent) and are now 1.0 percent higher than a year ago. The index is at its second highest reading over the past 12 months, but is noticeably down from this year’s peak level earlier this spring.
What gives? Shouldn’t these low rates lead to a flurry of contract signings? For awhile, it seemed like that would be the case. Pending home sales in April reached their highest level since February 2006 (117.4). Momentum was expected to carry into the summer.
According to Lawrence Yun, NAR chief economist, the reason for the slight slowdown is that there continues to be a dearth of available listings at affordable prices.”With only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cooldown after a very active spring.”
The good news is that buyer interest overall remains high. Recent data from NAR Research continues to show that most households – especially current homeowners – believe that now is a good time to buy a home.
However, unfortunately for many prospective buyers, until inventory conditions markedly improve, far too many of them are likely to either being priced out of the market or outbid on the very few properties available for sale.
Today’s key takeaway: the housing market needs more inventory like the Washington Nationals need a new closer.