Another Dose of Bad News for Housing Market

July 27, 2012 (Chris Moore)

The housing industry received another dose of bad news this month as contract signings for home purchases fell in June. This comes on the heels of reported declines in both existing home sales earlier this week and in new home sales reported two days ago.

It was the second time in the last three months that contract signings have declined, falling 1.4 percent to 99.3 in June according to the National Association of Realtors® (NAR) Pending Home Sales Index (PHSI).

Despite the decline in contract signings, the Index was still 9.5 percent higher than in June of last year when the Index was at 90.7 and left the Index at roughly the same level as two years ago when home buyers were rushing to beat the end of the home buyer tax credit program.

Lawrence Yun, chief economist of NAR, stated, “Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities. 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.”

Three of the four regions in the Index posted declines in their monthly level of sales contract activity, but all four still outperformed the previous year’s sales activity.

The West recorded the only increase in monthly signed contracts, climbing 2.6 percent from May. The Northeast posted the largest decrease, falling 7.6 percent from the previous month while the South and the Midwest saw declines of 2.0 and 0.4 percent, respectively.

Compared to June 2011, the Midwest was 17.3 percent higher, the Northeast improved 12.2 percent and the South and the West saw activity improve by 8.8 and 3.0 percent, respectively.

The PHSI is a forward looking indicator which generally indicates closings one to two months in the future.

Tags: pending home sales, existing home sales, contract signings, contract cancellations

Source:
NAR