Though existing-home sales took a hit last month, June’s pending home sales—a forward-looking indicator based on contract signings—suggest a comeback is in line for most of the country. Every major region of the U.S. except the Midwest saw an uptick in contract signings last month, the National Association of REALTORS® reported Monday.
NAR’s Pending Home Sales Index in June rose 1.5 percent from May to a reading of 110.2, marking the first year-over-year increase since March. “The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs,” says NAR chief economist Lawrence Yun. “Market conditions in many areas continue to be fast-paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria.”
Yun notes that a shortage of homes on the market continues to hold back sales activity, and housing inventory, which dropped in June, is now 7.1 percent lower than a year ago, according to NAR. Investors in particular are backing out of the market because of low inventory. In June, only 13 percent of home sales were to investors—the lowest level of the year and the smallest share since June 2009, NAR reports.
“It appears the ongoing run-up in price growth in many areas and less homes for sale at bargain prices are forcing some investors to step away from the market,” Yun says. “Fewer investors paying in cash is good news, as it could mean a little less competition for the homes first-time buyers can afford. However, the home search will still likely be a strenuous undertaking in coming months because supply shortages in most areas are most severe at the lower end of the market.”