An index that tracks pending home sales nationwide fell to a new record low in June, according to a report by the National Association of Realtors.
The association’s Pending Home Sales Index fell to 75.7 from an upwardly revised 77.7 in May. That’s an 18.6 percent drop compared to June 2009 and a new low for the index, which has data dating back to 2001.
May had seen the index’s previous record low and its first decline after three straight months of increases, which NAR attributed to the impending April 30 contract deadline to qualify for federal homebuyer tax credits. NAR’s chief economist, Lawrence Yun, said he expected home sales to fall in the short run after the tax credit’s expiration.
"There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve," Yun said in a statement.
"Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices."
The index tracks signed, but not closed, purchase contracts for resale homes. An index of 100 indicates the average contract activity in the index’s 2001 base year, which was a record year for existing-home sales.
The index fell year-over-year in every region. The Midwest saw the largest drop (27.8 percent), to 64.1. The index also fell 9.5 percent month-to-month there. The Northeast had the lowest index in June, 58.8, after a steep 25.4 percent year-over-year drop and a 12.2 percent monthly drop. In the West, the index fell 14.2 percent to 85.1, though it essentially remained flat from the month before.
Only the South saw a month-to-month index increase, 3.7 percent to 85.8. Still, the index fell 13.3 percent in the region compared to June 2009.
In its latest economic outlook, NAR included forecasts for 2012. The association expects unemployment to average out at 9.8 percent this year, falling to 9.5 percent in 2011 and 9.3 percent in 2012.
"We really need to see stronger job creation to have a meaningful recovery in the housing markets," Yun said.
NAR revised its 2010 forecast for the 30-year fixed mortgage rate slightly downward from its July outlook, to 4.9 percent. It expects rates in 2011 and 2012 to rise to 5.7 percent and 6.2 percent, respectively.
The association’s prediction for existing-home sales in 2010 was slightly gloomier than a previous forecast released last month — NAR expects an annual sales drop of 0.5 percent in 2010. NAR’s outlook for 2011 and 2012 was mixed — it expects existing-home sales to rise 8.3 percent in 2011 from 2010, but to fall 2.9 percent in 2012.
New-home sales in 2010 will rise 9.1 percent above the annual rate in 2009, then jump 44.8 percent in 2011 and 24.9 percent in 2012, according to the forecast. While housing starts are expected to rise 24.3 percent this year, residential construction overall is expected to drop 1 percent. Both indicators are expected to pick up in 2011, rising 42.1 percent and 22.7 percent, respectively.
NAR downwardly revised how much it expects the median existing-home price to rise to: 0.1 percent in 2010 and 1.5 percent in 2011. NAR’s latest forecast projects an existing-home median price of $172,700 this year and $175,300 in 2011 — the group’s previous forecast anticipated a $173,800 median price this year and $179,400 in 2011. The median is expected to rise by 2.8 percent in 2012, to $180,200.
The association’s prediction for a drop in new-home prices was also more modest this month, with a 1.2 percent decrease expected this year instead of the 2.6 percent decrease in the group’s previous forecast.
The median is expected to rise 3.2 percent in 2011 and 5.3 percent in 2012. Compared to last month, the forecast for this year rose to $213,200 and stayed essentially flat for 2011 at $220,000. NAR is predicting a rise to $231,700 in 2012.