U.S. Pending Home Sales Unexpectedly Increase In June

(RTTNews) - A report released by the National Association of Realtors on Thursday unexpectedly showed a modest increase in pending home sales in the U.S. in the month of June.

NAR said its pending home sales index rose by 0.3 percent to 76.8 in June after tumbling by 2.5 percent to a revised 76.6 in May.

Economists had expected pending home sales to decrease by another 0.5 percent compared to the 2.7 percent slump originally reported for the previous month.

Pending home sales increased for the first time since February but were still down by 15.6 percent compared to the same month a year ago.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

"The recovery has not taken place, but the housing recession is over," said NAR Chief Economist Lawrence Yun, "The presence of multiple offers implies that housing demand is not being satisfied due to lack of supply. Homebuilders are ramping up production and hiring workers."

The unexpectedly monthly uptick in pending home sales largely reflected strength in the Midwest, where pending home sales spiked by 4.3 percent.

Pending home sales in the Northeast also climbed by 0.6 percent, while pending sales in the South and West slid by 1.4 percent and 1.0 percent, respectively.

NAR also forecast the 30-year fixed mortgage rate to hit 6.4 percent this year before declining to 6.0 percent in 2024, while the unemployment rate is expected to rise slightly to 3.7 percent in 2023 before increasing to 4.1 percent in 2024.

"With consumer price inflation calming close to the Federal Reserve's desired conditions, mortgage rates look to have topped out," Yun said. "Given the ongoing job additions, any meaningful decline in mortgage rates could lead to a rush of buyers later in the year and into the next."

NAR also said it expects existing home sales to plunge by 12.9 percent in 2023, settling at 4.38 million, before spiking by 15.5 percent to 5.06 million in 2024.

National median existing home prices are expected to dip by 0.4 percent to $384,900 this year before rebounding by 2.6 percent to $395,000 next year, while housing starts are expected to tumble by 5.3 percent in 2023 before surging by 5.4 percent in 2024.

"It is critical to expand supply as much as possible to widen access to homebuying for more Americans," Yun said. "Home prices will be influenced by how much inventory is brought to market."

He added, "Increased homebuilding will tame price growth, while limited construction will lead to home price appreciation outpacing income growth."

A separate report released by the Commerce Department on Wednesday showed a notable pullback in new home sales in the U.S. in the month of June.

The Commerce Department said new home sales slumped by 2.5 percent to an annual rate of 697,000 in June after surging by 6.6 percent to a downwardly revised rate of 715,000 in May.

Economists had expected new home sales to tumble by 5.0 percent to a rate of 725,000 from the 763,000 originally reported for the previous month.

The downwardly revised rate of new home sales for May still represents the highest level since hitting 773,000 in February 2022.