Following close on the heels of the news that new home sales dropped precipitously in June, comes a report that pending home sales also fell off in June.
The National Association of Realtors reported Thursday that pending home sales, a forward-looking indicator based on contract signings, declined 1.4 percent. The index fell to 99.3 in June from 100.7 in May, but is 9.5 percent higher than June 2011, when it was 90.7.
On Wednesday, the Commerce Department reported that new home sales declined 8.4 percent in May to 350,000.
Lawrence Yun, NAR chief economist, cited inventory shortages as the reason for the decline.
“Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities,” Yun said in a statement. “We’ve been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors.”
NAR also said the Realtors Confidence Index shows a large imbalance between buyer and seller interest. The buyer traffic index was 60 in June, while the seller index was 41. A value of 50 implies neutral market conditions. The disparity between buyers and sellers began growing in early spring.
“Any bank-owned properties that have been held back in markets with inventory shortages should be released expeditiously to help meet market demand,” Yun said. “Housing starts will likely need to double over the next two years to satisfy the pent-up demand for both rentals and ownership.”
Yun also said that because lenders are dealing with a surge in refinance applications, there have been delays in the closing process.
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