Rising interest rates and a lack of housing inventory contributed to a decline in signed housing contracts according to the National Association of Realtors® (NAR) Pending Home Sales Index (PHSI).
The future contract signings indicator fell by 0.4 percent to 110.9 in June from 111.3 in May but was still 10.9 percent higher than in June of last year when the Index was at 100.0.
In May, the Index had reached its highest level in over six years.
Lawrence Yun, chief economist of NAR, stated, “Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June. The persistent lack of inventory also is contributing to lower contract signings.”
Two of the four regions in the Index posted declines in their monthly level of sales contract activity, while one region remained unchanged. All four of the regions reported a higher level of contract signings when compared to a year ago.
The South posted the largest monthly decline, falling 2.1 percent from the previous month while the Midwest followed with a decline of 1.0 percent.
The West was the only region that reported a gain in contract signings, increasing by 3.3 percent while the Northeast remained unchanged from the previous month.
The Midwest reported the largest increase in contract signings compared to June of last year with a 19.5 percent increase followed by the Northeast which reported a gain of 12.2 percent, while the South and the West posted increases of 9.5 and 4.4 percent, respectively.
The PHSI is a forward looking indicator which generally indicates closings one to two months in the future.
Yun added, “Closed sales may edge down a bit in the months ahead, but they’ll stay above year-ago levels.”
Tags: pending home sales, existing home sales, contract signings
National Association of Realtors
Reported by Chris Moore