Pending home sales up 0.3% nationwide, reversing a three-month trend
It was a modest increase, but it was the first time that pending home sales notched an increase since the winter, according to June numbers released by the National Association of Realtors® (NAR). Two regions registered decreases, but it wasn’t enough to offset the increases in the Northeast and Midwest. While numbers were up 0.3% from May, contract activity was down 15.6% from last June.
Each region is evaluated using NAR’s Pending Home Sales Index, a forward-looking measure of sales based on contract signings. An index of 100 equates to the level of activity in 2001, and June’s nationwide index came in at 76.8. Here’s a look at each region:
- Northeast: up 0.6% to 67.1, down 16.7% from June 2022
- Midwest: up 4.3% to 77.6, down 17.1% from June 2022
- South: down 1.4% to 93.3, down 14.3% from June 2022
- West: down 1.0% to 57.7, down 15.5% from June 2022
Despite the modest increase, NAR’s chief economist Lawrence Yun sees many reasons for optimism in the current market. "The recovery has not taken place, but the housing recession is over," he says, "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 NAR has revised their forecasts for the housing market over the rest of 2023 based on the market conditions they’ve been monitoring.
- Forecasting that the 30-year fixed mortgage rate will come down to 6.4% this year
- Further decline to 6.0% in 2024
- Existing-home sales expected to decrease 12.9% from 2022
- Foresee sales climbing 15.5% in 2024
- Home prices are expected to remain relatively steady, declining just 0.4% from last year to $384,900
- Next year, prices will rise 2.6% to $395,000
- Prices in the West could decrease while prices in the Midwest could rise
- Newly constructed home sales will increase by 12.3% in 2023, mainly due to the increase of new home construction
- Forecasting another increase in 2024, by 13.9%
"With consumer price inflation calming close to the Federal Reserve's desired conditions, mortgage rates look to have topped out," Yun notes. "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.
"It is critical to expand supply as much as possible to widen access to homebuying for more Americans. Home prices will be influenced by how much inventory is brought to market. Increased homebuilding will tame price growth, while limited construction will lead to home price appreciation outpacing income growth."
Importance of working with local experts
With the fluctuations we’re seeing between regions, and particularly between markets, June’s pending home sales numbers show why you should work with a local lender. They’ll help you understand what’s happening in your local real estate market and can help you finance the purchase of new construction as well. Find an expert loan officer in your area to help you make the most of your purchase.