The number of pending home sales ended its two-month, month-over-month slump and rose 0.9 percent from May to June, according to the latest data from the National Association of Realtors. Overall the Pending Home Sales Index – a forward-looking indicator based on contract signings – was at 106.9, 2.5 percent below last year’s level while marking the sixth straight month of year-over-year declines.

“After two straight months of pending sales declines, home shoppers in a majority of markets had a little more success finding a home to buy last month,” said Lawrence Yun, NAR’s chief economist in a release. “The positive forces of faster economic growth and steady hiring are being met by the negative forces of higher home prices and mortgage rates.”

Existing inventory was up slightly for the first time in three years, Yun said, but despite that, home price growth remains steady.

“Even with slightly more homeowners putting their home on the market, inventory is still subpar and not meeting demand,” said Yun. “As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.”

Yun forecasts that existing home sales will slump into the second half of the year, dropping 1.0 percent to 5.46 million. The median existing home price is expected to increase around 5 percent, Yun said. In 2017, existing sales increased 1.1 percent and prices rose even more precipitously at 5.7 percent.

Yun forecasts for existing-home sales in 2018 to decrease 1.0 percent to 5.46 million – down from 5.51 million in 2017. The national median existing-home price is expected to increase around 5.0 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.7 percent.

“Home price growth remains swift and listings are still going under contract at a robust pace in most of the country, which indicates that even with rising inventory in many markets, demand still significantly outpaces what’s available for sale,” said Yun. “However, if this trend of increasing supply continues in the months ahead, prospective buyers will hopefully begin to see more choices and softer price growth.”

Ruben Gonzalez, the chief economist at Keller Williams said he’s continuing to forecast home sales trending just below last year’s levels.

“The year-over-year increase in inventory we saw in June may provide a boost to sales at the end of the summer as the trend holds,” said Gonzalez. “At the moment, we don’t see it as enough to bring us up above 2017 home sales levels. The economic conditions underpinning demand are holding strong and supply is the primary factor holding back sales right now.”

Len Kiefer, Freddie Mac’s deputy chief economist, said the increase in contract signings mirrors recent trends when compared to mortgage rate movements.

“Rates moved higher in the first 5 months of 2018, but have stabilized around 4.5 percent since June,” said Kiefer. “This stability and a strong economy just might be the ingredients the housing market needs to get back on track.”

Email Patrick Kearns

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Will you attend ICLV virtually or in-person? The agenda is packed with stellar speakers and sessions.Learn More×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription