The National Association of Realtors (NAR) reports that pending home sales fell in June due to fewer home listings and shrinking sales inventory. The Pending Home Sales Index showed a 1.4% slip in June despite also registering 14 consecutive months of year-on-year gains. NAR analysts blame banks that are holding back listings and argue these should be released to help meet demand. Delays in the closing process have also been a stumbling block caused by a buildup of refinancing requests and banks that are taking more time to process paperwork in an attempt to avoid errors. For more on this continue reading the following article from Property Wire.
Pending home sales in the United States declined in June but marked 14 consecutive months of year on year gains, according to the latest figures from the National Association of Realtors (NAR).
Its Pending Homes Sales Index, a forward looking indicator based on contract signings, slipped 1.4% to 99.3 in June from a downwardly revised 100.7 in May but is 9.5% higher than June 2011 when it was 90.7. The data reflect contracts but not closings.
Lawrence Yun, NAR chief economist, said inventory shortages are a factor. ‘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,’ he explained.
NAR’s buyer traffic index stood at 60 in June while the seller index was 41, which shows a large imbalance between buyer and seller interest, Yun explained. A value of 50 implies neutral market conditions; the disparity between buyers and sellers began to grow in early spring and has been in a particularly large imbalance for the past two months.
‘Any bank owned properties that have been held back in markets with inventory shortages should be released expeditiously to help meet market demand. Housing starts will likely need to double over the next two years to satisfy the pent up demand for both rentals and ownership,’ he added.
The PHSI in the Northeast fell 7.6% to 76.6 in June but is 12.2% higher than a year ago. In the Midwest the index slipped 0.4% to 94.4 in June but is 17.3% above June 2011. Pending home sales in the South declined 2% to an index of 106.2 in June but are 8.8% above a year earlier. In the West the index rose 2.6% in June to 111.5 and is 3% higher than June 2011.
Yun pointed out that there also have been delays in the closing process. ‘With record low mortgage interest rates, there has been a surge of refinancing on top of a higher level of home purchases, which has been creating delays recently in the closing process,’ he said.
‘In addition, there have been some delays with recent foreclosure sales as banks take steps to ensure there are no paperwork problems. This is causing an uneven performance in sales closings, which is likely to continue, but we also see notably higher levels of sales activity compared with a relatively flat performance in the preceding four years,’ Yun added.
This article was republished with permission from Property Wire.